Goldman cuts GDP forecast after Senator Manchin says he won’t support Biden’s ‘Build Back Better’ plan

U.S. Senator Joe Manchin (D-WV) speaks to reporters at the U.S. Capitol in Washington, DC, November 1, 2021.

Jonathan Ernst | Reuters

According to Goldman Sachs, the apparent failure of President Joe Biden’s “Build Back Better” plan means economic growth could be weaker than expected next year.

Plan hit an important road on Sunday when West Virginia Senator Joe Manchin said he would not support the bill, meaning the bill did not get enough votes to pass the Senate.

Goldman Sachs chief economist Jan Hatzius said in a note to clients on Sunday that the bill’s failure – which includes substantial spending on climate infrastructure and social programs – would slowing economic growth in 2022.

“The enactment of the BBB has sounded like a close call and in light of Manchin’s comments, we are adjusting our forecast to remove the assumption that the BBB will become law. Even though the BBB is in its current form. seems unlikely, but there is a good chance that Congress will issue the Note.

Goldman slightly downgraded its forecast for real GDP growth for each quarter for the first three quarters of 2022. The company now forecasts 2% growth in the first quarter, followed by 3% and 2.75% in the latter two periods. Goldman previously expected 3%, 3.5% and 3% growth.

“Given our forecast, with the CPI headline level hitting 7% over the next few months before it begins to ease, the inflationary concerns that Sen. Manchin and others have expressed are likely to remain. exist, making it more difficult to get through,” the company also noted.

Michael Bloom of -CNBC contributed to this report. Goldman cuts GDP forecast after Senator Manchin says he won’t support Biden’s ‘Build Back Better’ plan

Sarah Ridley

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