Friday, August 6, 2010

Goldman Cuts GDP Forecast to Only 1.5% In 2010 2nd Half

SAN FRANCISCO (MarketWatch) -- Goldman Sachs Group Inc. /quotes/comstock/13*!gs/quotes/nls/gs (GS 155.20, +0.02, +0.01%) economists on Friday cut their forecasts for U.S. economic growth in 2011 and said they expect the Fed to respond to high unemployment with "another round of unconventional monetary easing," including more asset purchases. Economists led by Jan Hatzius and Ed McKelvey said they still expect growth in real gross domestic product to average 1.5% at an annual rate in the second half of this year. But they now see a more gradual pick-up by the end of next year. GDP is likely to average 1.9% in 2011 vs. a previous forecast of 2.5%, largely due to Congressional resistance to extending fiscal stimulus. The economists expect the Fed next week to announce a "baby step" to renewed unconventional easing next week.