Goldman Cuts U.S. Growth Forecast as Consumer Sees ‘Harder Path’

• Forecast for economic expansion in 2021 cut to 5.7% from 6%
• Delta variant, fading fiscal support seen weighing on consumer

Shoppers in the SoHo neighborhood of New York. Photographer: Juharat Pinyodoonyachet/Bloomberg

Goldman Sachs Group Inc. economists revised down their forecast for growth in the U.S. economy this year, pointing to a “harder path” ahead for the American consumer than previously anticipated.

Overall expansion in 2021 is now seen at 5.7%, economist Ronnie Walker wrote in a report to clients on Monday. That compares with an expectation of 6% published at the end of August.

Walker said the weaker growth will follow through into more of a pickup in 2022. Goldman raised its forecast for that year to 4.6%, up from 4.5% previously.

Explaining the downgrade for 2021, Walker wrote that American consumers are likely to spend less amid the Delta variant’s emergence, fading fiscal support and a switch from demand for goods to services. He added that supply-chain disruptions had hit inventory restocking too.

“The hurdle for strong consumption growth going forward appears much higher: the Delta variant is already weighing on Q3 growth, and fading fiscal stimulus and a slower service- sector recovery will both be headwinds in the medium term,” said Walker.

The bank also lifted its projection for the unemployment rate to 4.2% at end of 2021 from a prior estimate of 4.1%.