Friday, January 21

Goldman cut US growth estimate after setback to Biden’s fiscal bill

Manchin, a moderate Democrat, appeared to hit a fatal blow to the Government’s “Build Back Better (BBB)” bill Sunday, which has like aim to expand the social safety net and address the challenges of climate change.

“We had already incorporated a negative fiscal aspect for 2022 as a result of the lesser effect of the Covid emergency laws enacted in 2020 and 2021, and without the approval of the BBB, this scenario will be even more pessimistic than we expected.”Jan Hatzius, an analyst at Goldmans Sachs, said in a note sent to clients.

Hatzius lowered the US GDP expansion forecast for the first quarter of 2022 to 2% from 3%, disregarding that “BBB” will become a law, and lowered the second quarter outlook to 3% from 3.5% and the third quarter estimate to 2.75% from 3%.

“While the economic boost bill in its current form seems unlikely, there is still a good chance that Congress will enact a much smaller set of tax proposals related to manufacturing incentives and supply chain issues,” Hatzius said.