Goldman cuts US growth forecasts into 2022

The two main challenges to growth in the medium-term were a slowing of fiscal support and the need for spending on services. The declines were mostly offset by upgrades to projections for the following two years.

Goldman Sachs Group Inc. economists cut their forecasts for U.S. growth this year and next, blaming a delayed recovery in consumer spending.

Goldman’s team, led by Jan Hatzius, said in a report on Sunday that they now expect growth of 5.6% on an annual basis in 2021 versus their previous estimate of 5.7%, and 4% next year, down from 4.4%. The declines were mostly offset by upgrades to their projections for the following two years.

“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,” the economists said.

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,” they said.

Ultimately, they said 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.