Goldman Sachs on Monday trimmed down U.S. quarterly GDP forecast for 2022. The move came after U.S. Senator Joe Manchin withdrew his support to U.S. President Joe Biden’s $1.75 trillion domestic investment bill.
Manchin who is a moderate Democrat earlier came in as fatal blow to Biden’s Build Back Better (BBB) policy bill on Sunday. The bill is to back social safety net and tackle climate change.
“We had already expected a negative fiscal impulse for 2022 as a result of the fading support from COVID-relief legislation enacted in 2020 and 2021, and without BBB enactment, this fiscal impulse will become somewhat more negative than we had expected,” Goldman Sachs analyst Jan Hatzius wrote in a note on Sunday, as reported by Bloomberg.
Goldman has cut U.S. GDP forecast for Q1 2022 to 2% from 3% and Q2 forecast to 3% from 3.5% and Q3 forecast from 3% to 2.75%.
“While BBB in its current form looks unlikely, there is still a good chance that Congress enacts a much smaller set of fiscal proposals dealing with manufacturing incentives and supply chain issues,” Hatzius said.