US GDP forecasts down
The US economy is set to decline sharply in the third quarter Goldman Sachs, Morgan Stanley, Oxford Economics and the Atlanta Fed have all cut their GDP growth forecasts sharply in recent weeks. The effects of the rapid spread of the COVID Delta strain are not the only reasons for the downturn.
It is obvious to many on Wall Street that economic growth in the US may be slowing, but recent forecasts show that this will happen faster and more strongly than many might have expected. In recent weeks, these reputable institutions have lowered their forecasts for US gross domestic product for the third quarter of 2021:
- Goldman Sachs cut its forecast from 5.25% to 3.5%;
- Morgan Stanley lowered its estimate from 6.5% to 2.9%;
- Oxford Economics revised its forecast from 6.5% to 2.7%;
- The new forecast from the Atlanta Fed forecast growth of 3.7% for the quarter, down from an earlier expectation of 5.3% at the start of the month.
US GDP grew by 6.3% in the first quarter and by 6.5% in the second quarter. Meanwhile, according to government data, Americans' personal savings amounted to $1.97 trillion in the second quarter, up from $4.07 trillion in the first quarter.
The US economy today faces three strong negative factors at once:
1. the Covid-19 Delta strain is what lies on the surface. Some restaurants in the US have already started to close and consumer demand for tourism and offline entertainment is declining.
2. High inflation rising prices are hampering the growth of a key engine of the US economy consumer spending.
3. An end to direct government payments, rental assistance, additional unemployment benefit supplements, etc.
Since last year, the US Census Bureau has been collecting extensive data from Americans, asking consumers about everything, including employment status, childcare arrangements and various family expenses, with the data reflecting the real situation.
In the survey, 41% of US households said they had used some form of public assistance during the pandemic to pay for daily living needs.
With the US having phased out supplemental unemployment benefits, some childcare benefits, rent assistance and direct payments to the public, it is clear that financial income for a large proportion of the country's population has declined.
