Business Standard

Goldman cuts US growth projection


Goldman Sachs Group economists cut their forecasts for U.S. growth this year and next, blaming a delayed recovery in consumer spending. Goldman’s team, led by Jan Hatzius, said in a report on Sunday that they now expect growth of 5.6% on an annual basis in 2021 versus their previous estimate of 5.7%, and 4% next year, down from 4.4%. The declines were mostly offset by upgrades to their projection­s for the following two years.

“After updating our estimates of the key growth impulses that drive our consumptio­n forecast—reopening, fiscal stimulus, pent-up savings, and wealth effects— and incorporat­ing a longerlast­ing virus drag on virus-sensitive consumer services spending, we now expect a more delayed recovery in consumer spending,” the economists said. That, along with the assumption that semiconduc­tor supply won’t improve until the second half of next year and that inventory restocking will be postponed, “argues for a less front-loaded recovery from here than we had expected,” they said.

Ultimately, they said the two main challenges to growth in the medium-term were a slowing of fiscal support and the need for spending on services to bounce quickly enough to offset a decline in the purchases of goods.

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