President-elect Joe Biden's $1.9 trillion stimulus proposal has economists and bullish market analysts revising their U.S. growth expectations higher, predicting a reflation of the economy in 2021 and possibly more booming returns for risk assets.

Yes, but: Others are warning that what's expected to be reflation could actually show up as inflation, a much less welcome phenomenon.

On one side: Economists at Goldman Sachs raised their 2021 U.S. GDP forecast to 6.6% — a full 2.5 percentage points above consensus — and are projecting an unemployment rate of 4.5% at the end of 2021, down from 4.8%.

• Goldman's economists are further expecting to see 4.3% GDP growth in 2022 as well as nominal disposable income growth of 4.5% next year.
• The predictions are well above the already rosy consensus of most economists.

Between the lines: Goldman's economists have consistently been above consensus in their projections for the U.S. economy's rebound from the coronavirus pandemic. And they've largely been correct.

On the other side: "Right now everybody thinks we’re going to get reflation — that’s real growth going forward," Jim Bianco, president of Bianco Research, told me on the latest Voices of Wall Street podcast.

• "If that morphs itself into inflation that could be [a problem] for financial markets throughout the second half of the year."

Why it matters: Investors warn that rising inflation threatens the real economy and the stock market.

• "If we get to 2.6% or 2.7% on the core [inflation] number that’s the highest level we would have in 30 years," Bianco noted.
• "With the 10-year yield at 1.1% and with the stock market at a new high and a forward P/E ratio of 24 [times earnings] that’s going to be a problem for risk markets to see that kind of level of inflation even if the Fed says that they want that level of inflation."

What to watch: Even though Fed chair Jerome Powell and other top officials have said they welcome inflation, Bianco warns they are not in charge.

• "If you look at the policy shifts from the Fed … the last two times the Fed has changed policy the market has forced it on them and forced it on them rather quickly," he added.
• The Fed "can lay out all the plans in the world that they want as long as the market is in agreement with them. But if the market ever changes its mind the Fed is within days of changing policy."

With a vaccine boosting demand and continued supply chain disruption threatening supply, inflation is a real threat and a worry for many sectors of the economy, says Danielle DiMartino Booth, CEO of Quill Intelligence.

What we're hearing: "What happens to housing and everything that we’ve poured into housing if mortgage rates come off their record lows?" DiMartino Booth, a former staffer at the Fed, told me on the Voices of Wall Street podcast.

• "I think that’s the last thing that Jay Powell wants. Especially if you’re looking at what happens to risky assets because the world is not prepared for higher interest rates."
• "The Fed should be extremely careful of saying that it wants inflation … once the genie gets let out of the bottle the Fed’s not going to have a say in where inflation goes and I don’t think policymakers understand that."