The Home Front

Goldman Sachs Sees Deeper Recession, Higher Unemployment

By Luke Mullins

Posted: November 7, 2008

Shortly after today’s ugly employment report, Goldman Sachs has changed its economic forecast. It now expects a deeper recession and higher unemployment.

From a report by economists at Goldman Sachs:

BOTTOM LINE: We have marked down our near-term forecasts for real GDP – to annualized declines of 3½% and 2% in the fourth and first quarters, respectively – and we have added another 50 basis points of Fed easing by year-end. These changes reflect the accumulation of evidence that US domestic demand and production continue to fall sharply. As a result, we now expect the unemployment rate to reach 8½% by year-end 2009. We continue to assume enactment of a $200 billion (bn) package of fiscal stimulus early next year; although prospects of a larger package are rising, we prefer to wait until its timing and outlines become clearer before incorporating it into our outlook.

America is bankrupt

Just as Britain lost it's empire, America as the world power is in descent.

The only way America can retain power status in the world is to sell bits of industry and finance to overseas interests, mainly Japanese and Arabian entities.

Every empire has it's day, the first to the last. The American workforce has been overpaid and underworked for many years, America relying on overseas investment and instruments such as the price of crude oil being tied to the dollar, as insurance that the dollar would forever hold it's price as there is no immediate replacement for it. As each year passes the yen, euro, yuan and rupee amongst other currencies will topple the American dollar.

No one is asking America to descend without a fight, but it is imperative to honestly look at America's plight realistically, in order to salvage and rebuild what will be left.

The military might is now America's greatest asset, but for what use?

Soon in the region of $180 trillion dollars of derivatives in America will be seen to commence unravelling, as Warren Buffett calls them financial weapons of mass destruction. God save America, in this case people alone cannot.

daniel morris of NY @ Nov 07, 2008 17:23:30 PM

policy necessary to reduce the duration of the recession.

It appears that the US must reengineer its core sectors in manufacturing if it is to increase job opportunities at home. Too many sectors pioneered in the US like the auto industry have now been lost to other countries.Monetary and fiscal policies will keep the economy going but the real work needs to be done on the ground so that US firms can once again be world leaders in innovation , productivity and competitiveness. Funds spent on wars must now be spent to retrain people and retool industries. This is perhaps the best way to recession proof the economy in the future.

Dr. Dhanayshar Mahabir(Economist) @ Nov 07, 2008 12:38:46 PM

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The Home Front

The Home Front

Associate Editor Luke Mullins tracks the treacherous housing market and explains how to unload a five-bedroom McMansion or even find that dream home.

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