Goldman Sachs economists have downgraded their estimates for the US economy for both this year and next, after deciding that the spread of the Omicron mutation will provide “moderate downward” resistance to growth.
According to Bloomberg, in a report to its customers over the weekend, economist Joseph Briggs said that Goldman Sachs now expects US GDP to grow by 3.8% this year, instead of 4.2%. The report also mentions the reduction of its estimate for 2022 to 2.9% from 3.3%.
“While many questions remain unanswered, we now consider it most likely a moderate downward scenario where the virus spreads more rapidly, but immunity to severe disease is only weakened slightly,” Briggs said.
The economist said the Omicron mutation was likely to have only a modest effect on service costs and could exacerbate supply shortages. It could also delay when some people will feel comfortable returning to work, he said.
Briggs saw a mixed effect on inflation. While virus-sensitive sectors such as travel may be hurt, further shortages of supplies and manpower could push prices on a more permanent basis, he said.
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Source From: Capital
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