Goldman Sachs Sees (Even) Worse Recession, Higher Unemployment
More bad news: Goldman Sachs issued another downward revision to its economic forecast this morning. The firm says the revision is a response to tightening financial conditions, which it blames on policy impasses in Washington.
We have marked down our forecasts for US real GDP in response to continuing signs of falling domestic and foreign demand, labor market deterioration, renewed tightening in financial conditions, and an apparent impasse in fiscal policy pending the transfer of power to the Obama administration in late January. As a result, we expect the unemployment rate to reach 9% by the fourth quarter of 2009, profits to fall 25% for 2009 as a whole following an estimated 10% drop this year, and the Federal Open Market Committee (FOMC) to use nontraditional policy tools more aggressively, as detailed below…
We now estimate that real GDP is falling at a 5% annual rate in the current quarter, and we expect this to be followed by declines of 3% and 1% in the next two quarters. This deepens and extends the expected recession, bringing the drop in GDP close to the decline seen in 1982 (2.3% in our forecast versus 2.7% then). Previously we had estimated changes of -3.5%, -2%, and zero, respectively. In the second half of 2009, we expect growth to average 1%, only slightly less than before.
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Reader Comments
Obama's Economic Plan:
The value of the American dollar has steadily dropped since GWB got into office. How can spending almost 5 trillion debt dollars not result in a devaluation in us currency? They dramatically cut taxes, make wars that don't need to be fought, nearly double the US debt in 8 years,... and they seek to blame a newly elect president who naively (or perhaps not so naively) wants to undo the mess they left as their legacy?? This country is over-due for an independent. Corporations have so infiltrated the legislative, judicial, & election system of this country that a massive overhaul is way past due.
The problem in this country is massive greed. Spending trillons more in the next 4 years isn't going to do anything other than further erode the value of the US dollar & delay the inevitable... which is a massive economic correction that has been caused by trickle-'up' economics (which was a crock of you know what that was sold to the public by Reagan & his bunch of arms-4-hostages, gun-toting deceptive bunch. Trick-'down' economics was rightfully labeled voodoo economics. It never has paid for itself & it never will pay for itself. All it does is inflate GDP, increase inflation, & massively increase the debt of the country while concurrently lining the pockets of those who are connected to the political regimes who spin it for more than it really is.
obama
the guy is not even in office yet. you can't undo 8 yrs of BS from the Bush administration overnight. it will take years to undo the situation Bush has put us in
a bunch of sore losers
he has'nt even taken office yet and your already expecting him to fail
How come the town idiot G W Bush has a hall pass and he has nothing to do about this mess. all I hear
Its clintons fault
its his dads fault
its the bankers fault
no
we elected a moron who invaded a country on "Bad intelligience"
When it was more like cooked intellegience
I do not know why this guy still has the keys to the whitehouse he's been such a disgrace But you (the conservative movement )can sit there and bad mouth our next president and if he does not walk on water you'll crucify him. When h
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