Goldman Sachs: A Blue Wave of Democrats Would Benefit the Economy

President Trump has warned voters that Democrats wouldn’t be good for the economy as they would shut down…
Goldman Sachs

President Trump has warned voters that Democrats wouldn’t be good for the economy as they would shut down the economy, but Goldman Sachs tells its clients the exact opposite. Jan Hatzius, Goldman Sachs chief economist said that a ‘blue wave’ in which Democrats have control over the economy would help the company to upgrade their forecasts.

He maintained that if democrats take over early next year, that would likely result in higher taxes and regulation. However, Joe Biden has also vowed that there will be a bonanza of government spending, alongside very low interest rates, this would likely help to boost the economy.

Goldman Sachs maintained that a ‘blue wave’ would drastically increase the probability of a fiscal stimulus package of about $ 2 trillion after the January 20 inauguration. The bank also pointed out Biden’s spending plans on health care, infrastructure, education, and climate.

Taken together, this spending would at least match the likely longer-term tax increases on corporations and upper-income earnings.

Goldman Sachs

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Apart from Goldman Sachs, several Wall Street firms have also pointed out the benefits of a blue wave. According to Moody’s Analytics, if Biden’s economic proposals are approved; this would create about 7.4 million jobs, which is more than Trump’s. The United States’ economy would then return to full employment in 2022, which is earlier achieved than under Trump’s administration.

Only a few Wall Street firms had expected a clean sweep for Democrats this year, but that idea has significantly changed. A ‘blue wave’ is viewed as a possible outcome of the election.  The prediction markets are also predicting a blue wave.

It is still early to predict how Trump’s coronavirus infection will affect the election, but Biden is having an edge over Trump, this was revealed in a CNN poll carried out a few days after trump’s infection was announced. Among potential voters, 41% support Trump while 57% back Biden.

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