U.S. Growth Seen To Decline
Goldman Sachs has lowered its forecast of the United States (US) economic growth for this year to 5.7 percent from 6.2 percent, according to Anadolu Agency.
Photo Insert: The growth forecast by Goldman Sachs was originally 6.2 percent.
This marked the second time in a month that the New York-based multinational investment bank and financial services company has cut its gross domestic product (GDP) forecast for the US after Aug. 18 when it steeply lowered the third-quarter estimate to 5.5 percent from 9 percent.
Goldman Sachs said the downgrade reflects "a larger effect of the Delta variant on services spending," adding: "Although we expect the Delta setback to be brief, two longer-standing concerns pose challenges for consumption growth over the next few quarters."
"The Delta variant is already weighing on Q3 (third quarter) growth, and fading fiscal stimulus and a slower service sector recovery will both be headwinds in the medium term," it said Tuesday.
First, Goldman Sachs said it believes the US government's fiscal impulse will fade sharply from its second-quarter peak through the end of 2022.
Second, it said US consumers will need to rotate from a high level of spending back to normal on services, adding "spending on goods is likely to continue falling, though delayed purchases due to shortages of items such as new cars should slow the decline."
Goldman Sachs, however, lifted its 2022 growth forecast for US GDP to 4.6 percent from 4.3 percent.