Goldman Sachs trims US economic growth forecast

Economists for Goldman Sachs have lowered their forecasts for U.S. growth this year and next, citing a delayed recovery in consumer spending.

In a report Sunday, economists forecasted gross domestic product (GDP) expansion of 5.6 percent this year, down from the 5.7 percent previously estimated, according to Bloomberg. 

The report also projected GDP growth of 4 percent in 2022, compared to the previous 4.3 percent estimate.

“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 wrote in Sunday’s report.

The new estimates come just days after the Labor Department released data showing U.S. employers added 194,000 jobs last month, falling significantly short of economists’ expectations.

The unemployment rate fell sharply, to 4.8 percent, but it was overshadowed by job growth that had slowed for a second consecutive month following a surge in coronavirus cases over the summer.

The weak job growth is proving challenging for President Biden and congressional Democrats as they attempt to sell their economic agenda to voters with the midterm elections just a year away.