Goldman Sachs economists blame delta
The raging pandemic due to the delta variant is slowing US growth, according to Goldman Sachs.
"The impact of the Delta variant on growth and inflation is proving to be somewhat larger than we expected. We have lowered our Q3 GDP forecast to +5.5% .. Spending on dining, travel, .. is likely to decline in August, though we expect the drop to be modest and brief," they wrote in a note.
Goldman was forecasting 8.5% annualized GDP growth in Q3 at the end of July, having previously cut it from 9.5%.
It's not all bad news, as the Q4 forecast was bumped up to +6.5% from +5.5% as the recovery is pushed further out.
Overall through, the 2021 forecast for growth falls to 6% from 6.4% and 2022 was bumped up to 4.5%.
I would expect many more firms (and the Fed) to follow. My strong suspicion is that the market has already priced in the growth downgrade and is pondering Q4.
