Goldman Sachs cuts US GDP estimate, now sees economy shrinking 4.6% in 2020
- Goldman Sachs economists lowered their third-quarter US GDP growth forecast to 25% from 33% on Saturday, citing weak consumer services spending and the strong uptick in national coronavirus cases.
- Reimplementation of strict lockdowns and social distancing practices in states including California, Florida, and Texas are “already having a noticeable impact on economic activity,” the team led by Jan Hatzius wrote in a note.
- The firm lowered its full-year growth projection to -4.6% from -4.2%.
- Still, offset spending and reopening benefits led Goldman to boost its first-quarter growth forecast to 8% from 6.5%.
Revived state restrictions and continued stay-at-home activity will drag on the US economy more than previously expected, Goldman Sachs economists said Saturday.
The bank sees gross domestic product growing 25% in the third quarter, down from its previous expectation of a 33% increase. The year’s total economic contraction will worsen to 4.6% from 4.2%, the team led by Jan Hatzius wrote in a note to clients.
The downward revision is largely fueled by a slower-than-expected recovery in consumer spending. The recent resurgence in coronavirus cases has kept Americans from returning to restaurants, travel, and retailers. Stunted spending on key services will likely push a consumer comeback into September, the …continued .
[Source: Business Insider]