Here Are The Biggest Risks To Derail An Economic Recovery In 2021, Goldman Sachs Warns

Plus: Bitcoin Is Braced For A Huge $4 Billion Price Earthquake This Week

TOPLINE

As the United States races to distribute vaccines amid a winter surge in Covid-19 cases and lawmakers weigh another tranche of federal stimulus spending, analysts from investment giant Goldman Sachs are pointing to three major risks that could jeopardize the strong economic recovery and robust consumer spending boom they’re predicting in 2021.

KEY FACTS

The most severe risk, the analysts said, is the emergence of a coronavirus variant that is resistant to the vaccines that have already been developed, meaning that government virus spending would skyrocket again and the recovery would be put on ice while a new vaccine is developed.

In that scenario, the analysts predict that any progress towards herd immunity would be “lost or severely set back” and as a result, consumer spending wouldn’t recover until 2022.

The analysts note that this extreme scenario doesn’t factor into their baseline forecasts for the economy because viruses generally “do not mutate in a manner that regularly renders vaccines ineffective.”

A more moderate risk is that new variants of the virus make herd immunity more difficult to achieve because they are more infectious or make vaccines less effective, the analysts said.

That would mean the virus continues to spread for longer than experts are expecting, which would cause the rebound in consumer spending to be “both delayed and softer.”

Last, the analysts said heightened consumer caution, especially among at-risk groups like older individuals, that lingers after the virus abates could delay the return to normal, but they noted this risk is relatively limited since consumer spending has only fallen slightly this winter despite a huge surge in Covid-19 cases. 

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