Goldman Sachs cut its 2021 US growth forecast to 5.7%

The economists at Goldman Sachs Group Inc. Their growth forecast for the US economy this year, noting a more “harder path” ahead for the US consumer than previously expected.

The overall expansion in 2021 is now estimated to be 5.7%, economist Ronnie Walker wrote in a clients’ report released Monday. That compares with a 6% forecast published in late August.

Walker said that weaker growth would translate into a larger recovery in 2022. Goldman raised its forecast for that year to 4.6%, down from 4.5% previously.

Explaining the 2021 credit rating downgrade, Walker wrote that American consumers are likely to spend less amid the emergence of a delta variable, the removal of fiscal stimulus and a shift in demand from goods to services. He added that disruptions in supply chains also affected restocking.

“The obstacle to strong consumption growth in the future appears to be much larger: the delta variable is already affecting growth in the third quarter, and the withdrawal of fiscal stimulus and a slower recovery of the services sector will be complications in the medium term,” Walker said.

The bank also raised its unemployment rate forecast to 4.2% by the end of 2021 from a previous estimate of 4.1%.