Revenues/growth in question- Goldman Sachs downgrades the Economy into 2012

Discussion in 'Economy' started by Trajan, Jul 16, 2011.

  1. Trajan
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    Trajan conscientia mille testes

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    the fed is not going to expand revenue(s) in the teeth of 2% or less gdp growth.



    Following another week of weak economic data, we have cut our estimates for real GDP growth in the second and third quarter of 2011 to 1.5% and 2.5%, respectively, from 2% and 3.25%. Our forecasts for Q4 and 2012 are under review, but even excluding any further changes we now expect the unemployment rate to come down only modestly to 8¾% at the end of 2012.

    The main reason for the downgrade is that the high-frequency information on overall economic activity has continued to fall substantially short of our expectations. … Some of this weakness is undoubtedly related to the disruptions to the supply chain—specifically in the auto sector—following the East Japan earthquake. By our estimates, this disruption has subtracted around ½ percentage point from second-quarter GDP growth. We expect this hit to reverse fully in the next couple of months, and this could add ½ point to third-quarter GDP growth. Moreover, some of the hit from higher energy costs is probably also temporary, as crude prices are down on net over the past three months. But the slowdown of recent months goes well beyond what can be explained with these temporary effects. … final demand growth has slowed to a pace that is typically only seen in recessions. .. Moreover, if the economy returns to recession—not our forecast, but clearly a possibility given the recent numbers …

    snip-

    Unemployment on Election Day about where it is right now? Sputtering — if not stalling — economic growth? To many Americans that would sound like the car is back in the ditch — if it was ever out. Maybe Goldman is wrong, but economists across Wall Street have been growing more bearish.

    And recall that back in August of 2009, the White House — after having a half year to view the economy and its $800 billion stimulus response — made an astoundingly optimistic forecast. Starting in 2011, with Obamanomics fully in gear and the recession over, growth would take off. GDP would rise 4.3 percent in 2011, followed by … 4.3 percent growth in 2012 and 2013, too! And 2014? Another year of 4.0 percent growth. Off to the races, America.

    Even in its forecast earlier this year, Team Obama said it was looking for 3.5 percent GDP growth in 2012, followed by 4.4 percent in 2013, 4.3 percent in 2014.

    James Pethokoukis | Analysis & Opinion | Reuters.com
     
  2. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    If there are further problems with the PIIGS in Europe or increased violence and turbulence in the middle east then things could be even worse than what GS is forecasting. All we need is one major weather event or terrorist attack to disrupt everything. And if the credit rating for the US gets downgraded for some reason then that's going to hurt too. Sure, things could get better and I hope they do. But things could also worsen.
     
  3. william the wie
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    william the wie Gold Member

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    GS is being optimistic. Using income statement and cash flow policies to cover up balance sheet erosion simply does not work. And that has been what has been going on for the past 53 years.
     

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