Goldman Sachs lowers US economic growth to 5.7%

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Goldman Sachs has lowered its forecast of the United States (US)
economic growth for this year to 5.7 percent from 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.

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