- Fiscal support will provide a boost to consumers and lead to an economic boom in the second half of 2021, according to a team of Evercore analysts led by Dennis DeBusschere.
- "Despite what angry twitter folks and some news outlets are suggesting, the current fiscal package is large enough to make a significant difference for individuals," the analysts said.
- Evercore highlighted several stocks that are set to outperform next year. Many are in sectors beaten-down by the pandemic like consumer services, retail, and transportation.
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Fiscal support will bolster US consumers and lead to an economic boom in the second half of 2021, according to a team of Evercore analysts led by Dennis DeBusschere.
"Despite what angry twitter folks and some news outlets are suggesting, the current fiscal package is large enough to make a significant difference for individuals," the analysts said in a note to clients on Thursday.
The current proposed fiscal package will be roughly 3.5% of GDP in the first quarter, and could potentially add up to 300,000 jobs per month, Evercore said. This could occur even if direct payments to individuals are only $600, but Evercore predicts that amount will increase before a bill is passed.
However, progress on increasing the direct payments was stalled on Thursday after an attempt from Democrats to provide direct checks of $2,000 to individuals was blocked by House Republicans. This came after President Trump called on Congress to amend the bill and increase direct payments to $2,000.
Even if the size of the payments is not increased, however, the analysts said that the economy will see a boom in the second half of 2021 because vaccines will normalize economic activity and consumers who have saved during the pandemic will begin spending.
The analysts noted that the initial COVID-19 relief package in March provided $10,000 per household over the past nine months. Without that support, the average household would have lost $4,000 during the pandemic, said Evercore. When the vaccine leads to a resumption of normal activities, eager consumers will unleash some of that money into the economy.
Jim Paulsen of Leuthold is also eyeing the savings rate and predicting a 2021 boom in economic activity that's driven by pent-up demand. The chief investment strategist told CNBC that the US is currently seeing a higher savings rate than almost 99% of the time in post-war history. He said this will led to a "banner year" for the US economy where GDP will grow 6%.
Evercore detailed several stocks that are set to gain in 2021 as economic activity normalizes. Many of the stocks are in sectors that were beaten-down by the pandemic, like consumer services, retail, and transportation.
The firm has outperform ratings for consumer services like Texas Roadhouse, Marriott International, and Darden Restaurants. The analysts also see retailers including Ulta Beauty, Tractor Supply Company, and Ralph Lauren Corp. outperforming. Transportation companies like Lyft, Uber, and United Airlines also will benefit from an economic reopening, according to Evercore.