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Economic growth will be better than expected thanks to the resilient services sector, Goldman says

Teresa Nguyen, a respiratory therapist, goes over a patient’s charts inside a room for people with the coronavirus disease (COVID-19) at a hospital in Hutchinson, Kansas, November 20, 2020.

Callaghan O’Hare | Reuters

The U.S. economy will recover faster than expected in part because the sectors most susceptible to the most recent coronavirus spread aren’t taking as severe a hit, according to Goldman Sachs.

Separate analyses the firm has published over the past several days indicate a fairly strong growth path ahead. GDP in 2021 is projected to increase 5.3% compared to a 2020 drop of about 3.5%.

Economists have been worried that the aggressive spread of Covid-19 cases will exact an especially large toll on the battered services industry, but Goldman said data is “so far inconsistent with this view.”

“While many services industries saw large declines in activity in the initial stages of the virus, only the most virus-sensitive sectors have shown meaningful sequential declines in November, with most other industries close to or at their peak levels since the start of the pandemic,” Goldman economist David Choi said in a note.

“While still early, the data so far suggest that very high levels of virus spread may ultimately translate to a surprisingly small hit to overall activity this time around,” he added.

Services make up a huge part of the American economy. While the cons