Economists at Goldman Sachs have forecast that the US GDP could increase by 35% amid a better than expected improvement in consumer spending, 14% higher than forecasts by the rest of Wall Street. They anticipate a rise in Q3 GDP on account of the 1.25% rise in consumer spending during August.

Economists at the bank observed, “Following the sharp rise in spending in late spring and early summer, the virus resurgence and the surprise fiscal tightening threatened a reversal. But spending instead rose strongly in July, and four high-frequency measures indicate a further 1-2% increase in real spending in August.”

Other factors that support an upward revision in GDP estimates include inventories turning positive in the current quarter, which contribute around 5.9% to the economic growth. In addition, a better than expected jobs report for the month of August have also supported economists’ forecast for a higher GDP after a contraction by 31.7% seen during Q2.

Goldman economists also indicate optimism about growth rebounding into Q4 2020 and beyond as well. Optimism is supported by expectations of a vaccine being ready by the initial part of next year which could help bring the pandemic under control and help the economy recover.