Economists at Goldman Sachs are cutting their forecast for US economic growth this year from 6 percent to 5.7 percent, citing the ultra-contagious Delta variant as a reason for the slowing recovery.
The economists say they’ve downgraded their view of 2021’s annual growth because of the headwinds the economy is facing as the Delta variant triggers worries.
Those worries are weighing on all-important consumption of goods, they say. Consumers are the key driver of the US economy.
Meanwhile, the Goldman economists say, “fading fiscal stimulus” — no more checks in the mail and the ending of the federal bump to unemployment benefits — also mean likely slower going ahead. And supply chains that are still jammed-up from the pandemic also will weigh down growth, the bank said.
Goldman economist Ronnie Walker wrote in Monday’s note to clients that there would be a “harder path” for the US consumer than previously expected. The bank last called for 6 percent annual growth in its August forecast.
Already in the third quarter, data are coming in that point to a slowdown, he said.
The updated forecast comes days after a disappointing jobs report Friday. The US was expected to add 750,000 jobs in August, but instead added just 235,000 jobs.
Goldman on Monday also revised its unemployment estimate for the end of the year up to 4.2 percent from 4.1 percent.
While Monday’s report was more bearish on 2021’s economic growth than previous forecasts, it was also marginally more bullish on 2022 than the bank’s August call.
Goldman now expects 2022 US economic growth of 4.6 percent – up from its previous call of 4.5 percent.