Goldman Sachs: US Economy to Grow 5.6% in 2021, 4.0% Next Year – Bloomberg

Article originally posted on HERE on October 11, 2021

Bloomberg came out with the latest Goldman Sachs (GS) forecasts for the US economy during the weekend.

The report cites watered-down GDP growth forecasts for 2021 to 5.6% versus 5.7% expected prior. Going further, the GS expects the US economy to grow by 4.0% compared to 4.4% previous forecasts, per the news.

Key quotes

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 longer-lasting virus drag on virus-sensitive consumer services spending, we now expect a more delayed recovery in consumer spending.

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.’

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.

FX implications

With the fears of easing US economic growth forecasts joining the downside jobs report for September, the Fed tapering chatters should be challenged. This makes the FOMC minutes, up for publishing on Wednesday, as a more important event.

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