Goldman Sachs cuts its US GDP forecast for the 2nd time in a month after last week’s soft jobs report – but lays out 2 reasons why it’s still optimistic

Posted by Shalini Nagarajan,

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Goldman Sachs economists lowered their US growth forecast for 2021 to 5.7% from 6.2% on expectations of a “harder path” ahead for consumers.

This revision follows a weak August jobs report that showed the domestic economy added a disappointing 235,000 jobs during the month, falling well short of a forecast for a gain of 733,000 from a Bloomberg survey.

While consumption in the US has jumped by 16% since the depths of the pandemic and hit its pre-virus trend in the second quarter, the path forward looks littered with hurdles, Goldman economist Ronnie Walker wrote.

“The Delta variant is already weighing on Q3 growth, and fading fiscal stimulus and a slower service-sector recovery will both be headwinds in the medium term,” Walker said…read more.