"The main reason that we expect a hiring boom this year is that reopening, fiscal stimulus, and pent-up savings should fuel very strong demand growth," said Goldman's chief economist Jan Hatzius in a new report Monday titled "The Coming Jobs Boom."
Added Hatzius, "Another key reason we expect a quick labor market recovery is that two-thirds of remaining pandemic job losses are in highly virus-sensitive sectors, where employment should rebound as the economy fully reopens. The sharp increase in the virus-depressed leisure and hospitality category in the February employment report provided an early hint of things to come."
Hatzius is putting his forward economic projections where his mouth is at.
The widely followed economist reiterated his 7.7% U.S. GDP forecast for this year, the highest among Wall Street firms. Hatzius sees the unemployment rate reaching 4.1% by year end, the lowest among his peers on the Street.
Meanwhile, Goldman's chief U.S. equity strategist David Kostin reiterated his 4,300 S&P 500 price target for 2021 in part because of the jobs market recovery.
Goldman's optimism on the jobs market comes after a fresh read on jobs that many on the Street viewed as a key stepping stone to brighter months ahead as more people get vaccinated.
Non-farm payrolls rose by 379,000 in February, above the 200,000 expected. The unemployment rate fell to 6.2%, unexpectedly improving from January's 6.3%. And private payrolls improved 456,000.
Goldman's Hatzius expects monthly job creation to average 332,000 in the first quarter, then accelerating to 683,000 in the second quarter and moderating a touch to 667,000 in the third quarter. He sees fourth quarter monthly job gains averaging 522,000.
Other veteran economists think job growth could even be faster than what Goldman has outlined.
"In mid to late year, you will see job gains of above a million per month as people stream back into the labor force," RSM chief economist Joseph Brusuelas told Yahoo Finance Live.
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