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Goldman Sachs Reduces Third-Quarter GDP Forecast

CNBC.com
Wednesday, 28 Oct 2009 | 11:22 AM ET

As the economy teeters on the verge of recovery, Goldman Sachs on Wednesday lowered its GDP forecast to 2.7 percent from 3.0 percent.

AP

It did so after the release of the durable goods report, which showed that new orders for manufactured goods rose 1 percent in September.

Goldman said in a research note that while the headline gain in orders was in line with expectations, the numbers weren't as good as it had expected.

Shipments for nondefense capital goods, in particular, were weaker, the company said.

The lowered forecast underlined many experts' opinion that while the economy has shown signs of improvement lately, a full recovery is still a long way off.

"It's surprising that the numbers have been as good as they have," Phil Dow, wealth management managing director at RBC told CNBC, when asked about his view on the Goldman forecast change. Regardless, he said, it's still a big swing up from the big loss in GDP earlier this year.

A Reuters poll of economists forecast that GDP will 3.3 percent, which would be its first growth since the the second quarter of 2008. The economy shrank 0.7 percent in the second quarter of 2009.

Positive growth in gross domestic product would signal an end to a recession, which is defined by two straight quarters of decline.

The government will release its third-quarter GDP figure at 8:30 a.m. Thursday.

The day before the September jobs report, Goldman economists increased their forecast of job losses to 250,000 from 200,000, a call that turned out to be much closer to the actual number of 263,000.

(An earlier version of this story misstated the amount of the revision.)

Reuters contributed to this report

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