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LONDON: Goldman Sachs lowered its quarterly US growth forecast for 2022 to 2%, from 3% previously, after Sen. Joe Manchin withdrew his support for the $ 1.75 trillion domestic investment bill dollars from President Joe Biden.

Also known as Biden’s Build Back Better political bill, it aims to expand childcare and home care benefits, as well as investments in clean energy and climate change issues, between other sectors.

Manchin raised concerns about inflation and rising debt that would reduce the country’s ability to respond to the pandemic and geopolitical threats.

Reuters quoted Goldmans Sachs analyst Jan Hatzius as saying in a note released Dec. 19: “We were already expecting a negative fiscal boost for 2022 due to waning support for COVID relief legislation enacted in 2020 and 2021. Without the enactment of the BBB, this fiscal impulse will become more negative than we expected. ”

The company had cut its US GDP forecast for the first quarter of 2022 to 2% from 3% previously, assuming BBB would not become law.

Goldman also cut its forecast for the second quarter to 3 percent from 3.5 percent. The estimate for the third quarter has been revised down to 2.75% from 3% previously.

In a similar response, Moody’s Analytics said the company expects real GDP growth to be half a percentage point lower in 2022 if the proposed legislation does not become law.

According to a Reuters poll of economists released on Dec. 8, U.S. growth for 2022 has slowed to 3.9 percent from 5.6 percent this year.

Economists predicted that growth would slow next year, as the effect of past spending programs gradually wore off.

They expect the Federal Reserve to pursue tighter monetary policy to bring high inflation under control, according to a Reuters statement on December 20.

About Ruben V. Albin

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