.Goldman Sachs cuts U.S. second-quarter growth estimates
On Monday July 18, 2011, 12:45 pm EDT
WASHINGTON (Reuters) – Goldman Sachs has cut its forecast for U.S. second-quarter growth to 1.5 percent from 2 percent, citing weak consumer spending.
The downgrade follows last week’s raft of weak reports on retail sales, manufacturing and consumer sentiment, which have raised concerns that some of the factors impeding growth are no longer of a temporary nature, as previously thought.
A combination of bad weather and high commodity prices slowed economic activity in the first three months of 2011. But growth in the second quarter was also dealt a blow by supply chain disruptions from Japan following the March earthquake.
“Some of this weakness is undoubtedly related to the disruptions to the supply chain — specifically in the auto sector — following the east Japan earthquake,” said Goldman Sachs Chief Economist Jan Hatzius in a weekly note to clients issued late on Friday.
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“But the slowdown of recent months goes well beyond what can be explained with these temporary effects.”
The economy grew at a 1.9 percent pace in the first quarter, slowing sharply from a 3.1 percent rate in the final three months of 2010