Goldman Sachs Cuts Back Predictions for Good Economy, Saying Hard Path Expected

Goldman Sachs Cuts Back Predictions for Good Economy, Saying Hard Path Expected

( – Sitting presidents live and breathe economic reports and predictions. Their reelections typically hinge on the outlook for the nation’s stability. But, as it turns out, financial giant Goldman Sachs just threw a wrench in President Joe Biden’s plans.

On Monday, August 6, Goldman Sachs revised its US growth forecast, telling its clients that consumers would face a more difficult path than previously predicted. Faced with mounting COVID-19 cases due to the Delta variant, the investment bank lowered its estimated expansion for 2021 from 6% to 5.7%, representing a 0.3% drop from its August projection.

Goldman Sachs also based its revised figures on “fading fiscal stimulus” and a slower than anticipated recovery by the service sector. Both factors will create strong economic headwinds pushing back on third-quarter growth. It also considered the return of quarantines and other COVID-related restrictions in some states, as well as supply chain disruptions and the recent consumer shift in demand for services over goods.

Goldman Sachs also raised its unemployment estimate for 2021 from 4.1% to 4.2%. Yet on a more positive note, Goldman Sachs remains optimistic regarding 2022. Anticipating increased consumer confidence next year, it raised its forecast from 4.5% to 4.6%.

Overall, it appears the economy will continue to stabilize. However, it may take a bit longer than originally projected resulting in concern as Democrats move toward the upcoming 2022 midterm elections.

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