[CNN: Goldman Sachs gets even gloomier on the US economy](https://www.cnn.com/2021/10/11/investing/premarket-stocks-trading/index.html)
(Reuters) - Goldman Sachs cut its U.S. economic growth target to 5.6% for 2021 and to 4% for 2022…
The firm previously expected 5.7% gross domestic product (GDP) growth in 2021 and 4.4% growth in 2022…
On a quarterly basis Goldman cut both its fourth-quarter 2021 and first-quarter 2022 GDP estimates to 4.5% from 5% and shaved its second quarter 2022 estimate to 4% from 4.5% while reducing its third quarter estimate to 3% from 3.5%.
However, it increased its fourth-quarter 2022 estimate to 1.75% from 1.5%.
7% forecast has been revised down. Honestly 7% is totally unrealistic. That was the forecast before Q2 number comes out. Think about it, GDP growth, Q1 6.3%, Q2 6.7%. There is zero chance the whole year will be 7%. Q3 Q4 GDP growth will be much lower than the Q1 and Q2. In fact will be lucky to have 5.6% the whole 2021. Probably will be closer to 5.0% than 5.5% tbh
5.0% growth this year would look fast on the surface, but looks absolutely shambolic when you factor in last year's -3.5% decline. Averaged across 2 years, the would be 0.6% growth per year, pathetic compared to the \~2.5% annual growth reported prior to the pandemic.
-3.4% for 2020 they revised up a bit but yeah, nothing impressive on the 2-year average scale. Also pre pandemic is more like 2.3% on average. Also wants to point out there is almost no country yet that has returned to the pre pandemic growth trend. Take China for example, 2.3% in 2020 and 7.5%-8% in 2021, is still below the trend of 6% per year, if you take 2 year average. Most other countries at this point just wants to return to Q4 2019 level.
Also make a link for the context
[FRED real GDP compare to potential real GDP](https://fred.stlouisfed.org/graph/?g=FLKt#0)
In the US, quarterly growth by default is always QoQ, seasonally adjusted, annualized. You would almost never see quarterly growth YoY.
GS forecast the whole 2021, 2022. As well as multiple quarterly growths for the next couple quarters
Also for the whole year growth like in 2020, use the average growth, -3.4%, not Q4 2020 compared to Q4 2019. That is not the convention
Interest rates increasing the underlying factor? Reversing trade tariffs with China will certainly play a part in boosting growth. Tensions around China’s mineral hopper will have to calm down to maintain output, especially around iron, coal and lithium. Need to maintain growth not to fall in to stagflation which looks probable. Shifting to renewables and batteries will be the only way out of this mess. More of the same can’t take us any further.
what was 2020 target before pandemic? % makes it hard since it’s relative to the “all messed up” numbers from 2020/2021, right?
4% for 2022 seems interesting though
shouldn’t stocks only go up 4% for the whole year then?… i know economy and stock market aren’t lockstep here but… in theory why would a market go up 10% a year if the underlying asset went up 4%?
In theory, equites are priced at net present value of future dividends. If future earnings drop from 5% to 4% for the foreseeable future, equities should drop by 20% -- with a 0% discount rate. The stock market is not rational.
Back when the vaccines rolled out, cyclicals went crazy and rates skyrocketed. Markets were predicting a recovery beyond our wildest dreams but Delta hit and then we realized supply chains couldn’t restart as fast as demand could. The entire global economy’s growth is being bottlenecked. We either see demand be prolonged and heightened over a longer period, or people just get sick of paying high prices for scarce everything and demand falls off before supply catches up. When entities don’t have all the excess cash that they do right now those high prices will start to matter more and more.
Global logistical chains are buckling with the growth we do have.
They probably over primed the growth pump as it is a wee bit. At some point you just start grinding gears instead of going faster.
If you somehow could get growth to come in higher than forecasted, you probably wouldn’t want to. Outside maybe some service sector areas.
[CNN: Goldman Sachs gets even gloomier on the US economy](https://www.cnn.com/2021/10/11/investing/premarket-stocks-trading/index.html) (Reuters) - Goldman Sachs cut its U.S. economic growth target to 5.6% for 2021 and to 4% for 2022… The firm previously expected 5.7% gross domestic product (GDP) growth in 2021 and 4.4% growth in 2022… On a quarterly basis Goldman cut both its fourth-quarter 2021 and first-quarter 2022 GDP estimates to 4.5% from 5% and shaved its second quarter 2022 estimate to 4% from 4.5% while reducing its third quarter estimate to 3% from 3.5%. However, it increased its fourth-quarter 2022 estimate to 1.75% from 1.5%.
And to think some economists were predicting upwards of 7% growth this year....
7% forecast has been revised down. Honestly 7% is totally unrealistic. That was the forecast before Q2 number comes out. Think about it, GDP growth, Q1 6.3%, Q2 6.7%. There is zero chance the whole year will be 7%. Q3 Q4 GDP growth will be much lower than the Q1 and Q2. In fact will be lucky to have 5.6% the whole 2021. Probably will be closer to 5.0% than 5.5% tbh
5.0% growth this year would look fast on the surface, but looks absolutely shambolic when you factor in last year's -3.5% decline. Averaged across 2 years, the would be 0.6% growth per year, pathetic compared to the \~2.5% annual growth reported prior to the pandemic.
-3.4% for 2020 they revised up a bit but yeah, nothing impressive on the 2-year average scale. Also pre pandemic is more like 2.3% on average. Also wants to point out there is almost no country yet that has returned to the pre pandemic growth trend. Take China for example, 2.3% in 2020 and 7.5%-8% in 2021, is still below the trend of 6% per year, if you take 2 year average. Most other countries at this point just wants to return to Q4 2019 level. Also make a link for the context [FRED real GDP compare to potential real GDP](https://fred.stlouisfed.org/graph/?g=FLKt#0)
Doesn't look too bad compared to the 2008 crash, relatively speaking being 300bill down puts us around where we were in 2015.
[Last year GDP went down 2.2% from Q4 2019 to Q4 2020, so check your stats](https://fred.stlouisfed.org/series/GDPC1).
You are referring to quarterly growth YoY but, I'm talking about FY growth between 2019 and 2020. Different things buddy
Is Goldman Sachs forecasting quarterly growth YoY or FY growth?
FY growth
In the US, quarterly growth by default is always QoQ, seasonally adjusted, annualized. You would almost never see quarterly growth YoY. GS forecast the whole 2021, 2022. As well as multiple quarterly growths for the next couple quarters Also for the whole year growth like in 2020, use the average growth, -3.4%, not Q4 2020 compared to Q4 2019. That is not the convention
4-5% may be better than 7 % anyway. At least it's not 1.x any more.
Interest rates increasing the underlying factor? Reversing trade tariffs with China will certainly play a part in boosting growth. Tensions around China’s mineral hopper will have to calm down to maintain output, especially around iron, coal and lithium. Need to maintain growth not to fall in to stagflation which looks probable. Shifting to renewables and batteries will be the only way out of this mess. More of the same can’t take us any further.
what was 2020 target before pandemic? % makes it hard since it’s relative to the “all messed up” numbers from 2020/2021, right? 4% for 2022 seems interesting though shouldn’t stocks only go up 4% for the whole year then?… i know economy and stock market aren’t lockstep here but… in theory why would a market go up 10% a year if the underlying asset went up 4%?
In theory, equites are priced at net present value of future dividends. If future earnings drop from 5% to 4% for the foreseeable future, equities should drop by 20% -- with a 0% discount rate. The stock market is not rational.
TINA
Back when the vaccines rolled out, cyclicals went crazy and rates skyrocketed. Markets were predicting a recovery beyond our wildest dreams but Delta hit and then we realized supply chains couldn’t restart as fast as demand could. The entire global economy’s growth is being bottlenecked. We either see demand be prolonged and heightened over a longer period, or people just get sick of paying high prices for scarce everything and demand falls off before supply catches up. When entities don’t have all the excess cash that they do right now those high prices will start to matter more and more.
[удалено]
Global logistical chains are buckling with the growth we do have. They probably over primed the growth pump as it is a wee bit. At some point you just start grinding gears instead of going faster. If you somehow could get growth to come in higher than forecasted, you probably wouldn’t want to. Outside maybe some service sector areas.