Goldman: These Are The 5 Reasons The Economy Now Looks Way Better


Photo: Goldman Sachs

Goldman Sachs revised their growth forecast higher for 2011 this week, from 2.0% GDP growth for the year to 2.7% growth (via Zero Hedge).This new bullishness is built on a series of factors, centered on an improving jobs market and a better situation in manufacturing.

And while yesterday’s weak jobs report might have dimmed immediate hopes, Goldman, and top economist Jan Hatzius, remain confident things are looking better for 2011.

US consumers are starting to spend again, though the pace will slow in early 2011, and pick up again in Q4.

Manufacturing will continue to grow, but it will not explode higher because the inventory cycle suggests things will slow.

Existing home sales will rise, but very slowly. It's unlikely new home sales will grow for some time.

The jobs market is slowly improving, and while hiring will continue to be low in H1 2011, it should pick up in H2.

Inflation is going to remain low in the US, and this will benefit the economy because it will lead to more accommodative Fed policy (potentially more QE).

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