Goldman Sachs Drops GDP Estimate; Expects Lower Growth This Quarter

Goldman Sachs economists have revised their forecast for 2020’s economy downwards, but still think things could be back on track by around September, Bloomberg reports.

Goldman Sachs said the new restrictions imposed by some states to help curb fresh outbreaks of the coronavirus could help, a report published by a team led by economist Jan Hatzius on Saturday said.

They now predict the economy will only grow by 25 percent in the third quarter, rather than 33 percent, as was previously predicted. That would result in the economy falling 4.6 percent this year instead of 4.2 percent as was previously forecast.

“A combination of tighter state restrictions and voluntary social distancing is already having a noticeable impact on economic activity,” the report said, as reported by Bloomberg, though the economists noted that spending is likely to slow down for the time being as that goes on.

The economists were still predicting a growth of 5.8 percent next year, and that unemployment will be at around 9 percent by the end of 2020. Previously, they’d predicted that number would be 9.5 percent.

The team said wearing masks would make a difference, too.

Goldman Sachs recently made a statement that mandatory face masks could be the key to both cutting COVID-19 cases and helping the economy keep moving. By wearing the masks, Hatzius posited that the number of cases would be significantly better as opposed to the recent spates of mass outbreaks.

By instituting that policy, the economy will also avoid a 5 percent fall in its gross domestic product (GDP), Hatzius noted.

There were over 35,000 new COVID-19 cases in the U.S. on June 29, and the Goldman calculations say that number could be reduced by around 357 per day if everyone had to wear a mask — a small number that nevertheless would add up.

The Goldman study got its results by comparing the infections in states with mask mandates to those without them, and surveys of how frequently people wear masks when they go out.