Goldman Sachs cut US growth next year from 4.2% to 3.8% on Omicron


The emergence of a new variant of COVID-19, Omicron, is expected to slow the U.S. economic growth next year.

According to CNN broadcast on the 5th (local time), Goldman Sachs announced on the previous day that it had downgraded its annual GDP growth forecast for the United States in 2022 to 3.8% from the previous 4.2%.

Goldman Sachs forecasts that US GDP will grow 2.9% in the fourth quarter of next year from the fourth quarter of this year.

This is a decrease of 0.4 percentage points from the previous forecast of 3.3%.

Goldman Sachs cited the risks and uncertainties posed by omicron mutations as the background to its downward revision to its growth rate.

Goldman Sachs economist Joseph Briggs warned that the omicron mutation could slow the reopening of the economy, but expects it to “create only a slight impediment” to service spending.

“I think the most likely scenario is a mild downwards scenario in which the virus spreads faster but only slightly weakens immunity to severe disease,” Briggs said in the report.

However, if there are many people who are reluctant to return to work due to Omicron mutation, Goldman Sachs predicted that the labor shortage could last longer than initially expected.

Global supply chains could deteriorate further if other countries introduce stringent restrictions to prevent the spread of the mutation, but it will not cause significant disruption as U.S. trading partners have increased vaccination rates.

Earlier, International Monetary Fund (IMF) President Kristalina Georgieva also mentioned on the 3rd that there is a possibility that the global economic growth forecast may be slightly lowered due to the spread of omicron mutations.

The recent sharp decline in small and mid-cap stocks in the US is also an ominous sign for the US economic outlook, CNN analyzed.

According to the Wall Street Journal (WSJ), the Russell 2000 index, made up of small and mid-cap stocks, has fallen 7.4% since Thanksgiving Day on the 25th of last month, when the Omicron mutation was reported, leaving the S&P 500, a large-cap index, down by 3.5% (3.5%). exceeded twice.

The Russell 2000 Index has fallen more than 10% from its 52-week high and entered a correction zone.

This is a worrying signal, as Russell 2000 index companies rely primarily on the US domestic market, unlike some of the world’s most profitable mega corporations, CNN noted.

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