According to analysts from Goldman Sachs, US economic growth will slow down significantly in the second half of the year, mainly because the services sector growth is expected to slow due to less spending on services.
Analysts now expect an 8.5% annualized growth in the third quarter, and a 5% growth in the last quarter of this year. Annual growth is now expected to be at 6.6%.
The same is expected for next year, with growth expected to return to its pre-pandemic pace and range between 1.5 and 2%.
According to the analysts, spending in the services sector remains depressed mainly because some activities are associated with high exposure to the virus while others are connected to office-based work.
Another factor that could keep hindering economic growth is the spread of the delta variant of the coronavirus, though this impact could be limited since imposing restrictions and shutting down the economy does not seem an attractive option.
“At this point, our forecast is instead distinguished from consensus expectations by the sharpness of the deceleration that we expect over the next year and a half,” commented the analysts. “It is increasingly clear that while mass vaccination has had a huge impact on service sector activity, it is unrealistic to expect virus fears to instantly disappear entirely.”
Despite a very ambitious mass vaccination program, the United States still struggles with the spread of the COVID-19 disease. Since the beginning of the pandemic, 35,287,269 COVID-19 cases have been reported, including 627,039 deaths, making the United States the most affected country in the world.
So far, 342 million vaccine dosages have been distributed among the United States population. 163 million of individuals are now fully vaccinated, which account for 49.7% of the population.
Inflationary pressures are also rising, which threaten economic recovery as well. These pressures are mainly due to the implementation of the Biden administration’s fiscal stimulus plans. However, this inflationary process is expected to be short-lived according to the Federal Reserve Chaiman Jerome Powell.
Since the beginning of the week, the US dollar has dropped by 0.13% against a bundle of its main competitors, breaking a two-week gaining streak. In Monday's session, the US Dollar Index dropped by 0.31%, closing the session at the 92.61 level and losing ground for the second consecutive day.