Goldman Sachs Lowers GDP Growth Forecast Amid Concerns Over US Infrastructure Bill Failure

Senator Joe Manchin of the U.S. Democratic Party
[Photo by Yonhap News]

[Asia Economy Reporter Song Seung-seop] Goldman Sachs has downgraded its forecast for U.S. economic growth next year. This is because the likelihood of President Joe Biden's $2 trillion budget bill being passed within the year has become virtually impossible.

According to major foreign media on the 20th, Goldman Sachs released a report stating that it expects the U.S. real Gross Domestic Product (GDP) growth rate in the first quarter of next year to reach 2%. This is a 1 percentage point decrease from the previous forecast of 3%. Additionally, the forecast for the second quarter was lowered from 3.5% to 3%, and the following quarter from 3% to 2.75%.

Goldman Sachs cited the reduced probability of the "Build Back Better Act" passing Congress as the reason for the downgrade. This bill refers to the U.S. social welfare and climate change budget plan. Initially, the probability of passage was considered to be over 50%, but the latest report excluded the possibility of passage altogether.

This appears to have been influenced by statements from Senator Joe Manchin of the Democratic Party. In a Fox News interview on the morning of the same day, Senator Manchin said, "I cannot go any further," and stated, "I am opposed to the bill." Manchin has previously expressed negative views on the Build Back Better Act, citing concerns that it could cause inflation.

Goldman Sachs also pointed to the significant rise in the U.S. Consumer Price Index (CPI) and the spread of the new COVID-19 variant Omicron as factors that will make congressional approval more difficult.

However, it predicted that the U.S. Congress might pass a scaled-down version of the Build Back Better Act focusing on manufacturing incentives and supply chain issues.

This content was produced with the assistance of AI translation services.