Goldman Sachs warns economic delay for the United States this year

Goldman Sachs foresaw a low economic growth for the United States this year due to the onslaught of the Delta variant of COVID-19.

Image courtesy of Fortune

Bloomberg reported that economists from Goldman Sachs Group forecast a low economic growth for the United States this year due to further disruptions on the chain of supplies and an increase in inflation by the delta variant of COVID-19, according to a recent article by Fortune.

The bank used to forecast 6.4 per cent for the whole year but now surmises a growth by 6 per cent this year for the gross domestic product of the United States, below the median expectation of 6.2 per cent in a survey from Bloomberg with a low estimate of 5 per cent. Goldman upgraded its forecast for 2022 from 4.4 per cent to 4.5 per cent.

David Mericle and other economists from Goldman noted clients on Wednesday, “The impact of the delta variant on growth and inflation is proving to be somewhat larger than we expected… The delta variant and other disruptions are also likely to further raise prices of supply-constrained durable goods through year-end”.

They observed a delay in booking restaurants, travel by air, and elective procedures at hospitals, which they interpreted as a sign that fewer consumers will spend on dining, travel, and certain services in August.

Goldman forecasts a drop by 1 per cent in spending by consumers in August after a report from earlier this week showed that sales on retail in July declined beyond expectation.

The economists warned that companies may increase prices due to problems on the chain of supplies for some time, forecasting 3.75 per cent for the measure of inflation by personal expenditures on consumption at the core when this year ends.