Goldman Sachs Group Inc. Economists lowered their forecast for U.S. Economic growth for 2021, citing a bigger-than-anticipated impact from the COVID-19 delta variant that bodes for further supply-chain disruptions and elevated inflation.
The bank now sees U.S. Gross domestic product rising 6% this year, from a prior full-year forecast of 6.4%. That’s lower than the median expectation of 6.2% in a Bloomberg survey, which has a low estimate of 5%. Goldman slightly boosted its 2022 forecast to 4.5%, from 4.4%.
“The impact of the delta variant on growth and inflation is proving to be somewhat larger than we expected,” Goldman economists including David Mericle wrote in a note to clients Wednesday. “The delta variant and other disruptions are also likely to further raise prices of supply-constrained durable goods through year-end.”
Spending on dining, travel and some other services is likely to weaken in August, the Goldman team wrote, citing signs of a slowdown in restaurant bookings, air travel and elective procedures at hospitals.
Goldman forecast a 1% drop in consumer spending in August, following a report earlier this week showing July retail sales that fell more than expected.
The economists see supply-chain hurdles plaguing companies for some time, forcing them to increase prices. They bumped up their forecast for the core personal consumption expenditures measure of inflation to 3.75% at the end of 2021.