Goldman Sachs has downgraded its growth prospects in the United States. by 2020, saying that a reinstatement of Covid-19 restrictions due to the increase in cases in parts of the country will weigh on consumer spending.
According to the chief economist of the bank, Jan Hatzius, in a note sent to customers during the weekend of July 4, in which the United States recorded nearly 156,000 new cases of coronavirus. “The healthy rebound in consumer spending since mid-April now seems to have stalled in July and August, with authorities imposing additional restrictions to contain the spread of the virus,” said the economist and his team.
“In recent weeks, Covid’s situation in the United States has worsened considerably to the point that the United States is now a notable outlier in advanced economies,” he said, adding that the states representing more than half of the American population now meets one or none of the activation criteria recommended by the CDC for reopening.
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Hatzius now expects U.S. growth to shrink by 4.6% in 2020, compared to a previous forecast of a 4.2% drop. For 2021, the bank is sticking to its growth forecasts to recover 5.8%.
The good news is that Goldman does not believe that consumers are coming back to a complete standstill and expects the economy to get back on track in September for two reasons:
“First, other large economies have returned to similar levels of activity while containing the virus, showing that further progress is possible. Second, changes in policy and behavior, such as wearing masks, provide opportunities to control the virus at minimal economic cost. The recent implementation of a mask warrant in Texas shows that the US authorities are willing to adapt, “said Hatzius.
Inspiration can also be found in the way other countries are currently driving, he noted. “Similar economies have clearly found a more effective way to balance the reopening of the economy and keep the virus under control, and we believe the United States is likely to finally find its way towards a better approach,” said a he declared.