Morgan Stanley, JPMorgan (JPM), and Goldman Sachs are lowering U.S. GDP growth expectations in Q4 due to lack of new fiscal stimulus, according to Yahoo!finance. Morgan Stanley slashed GDP forecast from annualized growth of 9.3% to 3.5% and economy for full year to contract by 2.7%, more than 1.5% previous forecast. JPM expects Q4 growth to be 2.5% and economy contracting by 4.2%. Goldman forecasts 1 3% Q4 growth and 3.5% economy contracting.

  • Withdrawal of fiscal support to reduce disposable income in Q4 to almost the pre-pandemic period-Jan Hatzius, Goldman economist
  • Although additional spending helpful, Fed skeptical about stimulus needs to spur growth. 
  • Forecasts a better-than feared dynamic on consumer spending and household balance sheets state, despite cuts on growth outlook.
  • Housing market resilience, rising consumption, and developments on rapid COVID-19 testing a case for America’s economic future optimism.
  • Timely spending measures trended higher, implying an offset from ongoing reopening and adaptation of service sector.
  • “Diminishing fiscal support will test the resilience of the economic recovery,”-Morgan Stanley.
  • Slowdowns more about recovering past the initial snapback phase than an exhaustion sign.

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