Reuters reported that Goldman Sachs is cutting the firm’s estimates for U.S. growth in the second half of this year to between 1% and 1.5%, as it sees the economy “losing further momentum.” Goldman had previously projected 2% growth in the third and fourth quarters. It was the firm’s third cut in GDP estimates in August.
In related news, both Citigroup and JPMorgan Chase lowered their 2011 growth forecasts last week. Citigroup cut its 2011 growth forecast to 1.6% from 1.7% and lowered its projection for next year to 2.1% from 2.7%, according to a note to clients. JPMorgan Chase is now forecasting 1% growth in domestic GDP in the fourth quarter, down from an earlier projection of 2.5%, the bank said last week.
The Philadelphia Fed said mid-Atlantic manufacturing contracted sharply in August and expectations plummeted, raising worries about third-quarter economic activity. The Philadelphia Fed noted that its factory-sector index of general business activity fell to -30.7 this month from 3.2 in July and -7.7 in June. The August index was the lowest since March 2009, when the U.S. was in recession.
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