Goldman Lowers U.S. GDP Forecast, Sees 4.6% Contraction in 2020

[beijingwalker]

Goldman Lowers U.S. GDP Forecast, Sees 4.6% Contraction in 2020
By Simon Kennedy
July 5, 2020, 3:56 PM GMT+8

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 team said.

"The healthy rebound in consumer services spending seen since mid-April now appears likely to stall in July and August as authorities impose further restrictions to contain virus spread," they wrote.

The manufacturing and construction industries have largely avoided such a halt and will continue their recovery, Goldman added. The firm maintained its projection for 8% growth in the fourth quarter.

Goldman's latest economic forecast arrives just as the US plunges into its second wave of coronavirus infections. Daily new cases passed 50,000 over the holiday weekend and outbreaks in California, Texas, Florida, and other states are driving the reimplementation of strict shutdown measures. Texas' mask mandate shows some states are reacting swiftly to the uptick in cases, but it's still "admittedly hard to know" how the rest of the nation will adapt in the coming weeks, Goldman said.

"A combination of tighter state restrictions and voluntary social distancing is already having a noticeable impact on economic activity," the economists said.

Though the pandemic will put off an economic recovery into next year, late reopenings will accelerate growth in 2021, the bank added. Recent positive updates from coronavirus vaccine trials also suggest a treatment could reach the market next year.

Several economists have pointed to an effective virus treatment as a key fuel for boosting consumer confidence, as the lasting risk of contracting coronavirus could keep Americans at home even as economies reopen. In all, vaccine hopes and delayed reopening benefits drove Goldman to boost its first-quarter forecast to 8% from 6.5%.

https://markets.businessinsider.com...ate-growth-expectations-q3-2020-7-1029369080#

 

[beijingwalker]

This is a vast overestimation, US economy could shrink by over 20% this year, see how the virus is spreading like wild fire unchecked every passing second now in US.

U.S. GDP fell at a 5% rate in the first quarter, and the worse is likely on the way
PUBLISHED THU, JUN 25 20208:47 AM EDT
KEY POINTS

• The U.S. economy shrank at a 5.0% rate in the first quarter, as expected.
• A much worse decline is seen in the current three-month economic period because of the coronavirus pandemic.
• The decline in the gross domestic product, the total output of goods and services, in the January-March quarter was unchanged from the estimate made a month ago, the Commerce Department reported.

The U.S. economy shrank at a 5.0% rate in the first quarter with a much worse decline expected in the current three-month economic period because of the coronavirus pandemic.

The Commerce Department reported Thursday that the decline in the gross domestic product, the total output of goods and services, in the January-March quarter was unchanged from the estimate made a month ago.


That was the sharpest quarterly decline since an 8.4% fall in the fourth quarter of 2008 during the depths of the financial crisis.

The first quarter decline reflected just two weeks of the shutdowns that began in many parts of the country in mid-March.

Economists are forecasting a much bigger GDP drop of around 30% for the current April-June period.

https://www.cnbc.com/2020/06/25/us-gdp-q1-2020-final-reading.html

 

[mmr]

This is way more positive expectations. If usa cant control the virus it might go down to negative 10 percent or even worse by end of the year.

 

[obj 705A]

Only 4.6% contraction? Hahahaha wishfull thinking from Goldman Sucks economists.
Even though the US only began very mild social distancing measures at mid March (so there really was zero lockdown for almost the entire first quarter) Q1 was a contraction of 5%!
Q2 will be catastrophic (to put it mildly) for the US economy.
They were betting on the health situation to start getting better in Q3 yet the epidemic in the US is getting much worse in Q3! So there is a very good chance the US economy will be thrashed even harder in Q3.
now their hope is probably on Q4 for the economy to stop going down the gutter, thankfully Trump will remain the leader of the US for the rest of 2020 even if he loses elections, and we can always count on that Orangutan to continue flip flopping in dealing with Covid.
I wouldn't say that the US economy would contract to the extent that China's GDP would become bigger, however for sure due to the Oraguntan's disastrous way of handling Covid..the date of China's nominal GDP surpassing that of the US have probably become earlier than 2030.
For more than 3 years now the Democrats have been accusing Trump of being a puppet of Putin who wants to destroy the US from the inside & you know what? May be they are right LOL , perhaps tovarishch Trump is intent on causing as much damage to the US as possible before he leaves office.

Comrade Trump: "make China great again"