By: Dividend Sensei
After epic rallies in 2019 and 2020, the market is taking a breather so far in 2021.
Of course, not all stocks are performing equally well or poorly.
- S&P 500 is barely up for the year
- Nasdaq is down for the year
- Enbridge (ENB), a Canadian dividend aristocrat pipeline giant is up like a rocket, 10% in two weeks
Moody’s, one of the 16 most accurate economists in the World according to MarketWatch, has just put out its latest base-case economic forecast.
- which has important implications for your portfolio
- because while the greatest economic boom in 35 years is possibly coming
- not all stocks will benefit equally
Why Moody’s Expects Two Years of BlockBuster Growth
Moody’s points out that the US is now on track to potentially deliver a fiscal stimulus of almost 25% of GDP, the highest in the world.
With this additional boost, real GDP should be robust at just over 5% this year and the same next, bringing the economy back to full employment by early 2023.” – Moody’s (Emphasis added)
Moody’s expects inflation-adjusted GDP growth of more than 10% in the next two years.
- the best GDP growth in 35 years
Moody’s is now forecasting a $1.2 trillion net infrastructure bill.
- $1.5 trillion in total spending
- with $370 billion funded by increased taxes
- tax hikes expected to start in 2024
A total of $3.1 trillion in total fiscal stimulus is what Moody’s considers the most likely outcome.
- most likely passed in the first half of 2021
- via reconciliation
The total amount of stimulus would be close to $7 trillion, $12 trillion if you include the Fed’s QE efforts.
- 60% of GDP worth of combined stimulus
Moody’s is so far the most optimistic blue-chip economist when it comes to stimulus but Goldman and Morgan Stanley both expect about 6% GDP growth in 2021 as well.
- Goldman expects $1.1 trillion in round three stimulus ($800 billion less than Moody’s)