Energy Finance

Goldman Sachs has lowered its U.S. growth forecast, noting fiscal policy stagnation, record increases in unemployment and a sharp decline in profits. It now expects U.S. GDP to fall 5%percent in the current quarter, with unemployment rate reaching 9% in the fourth quarter of 2009.

It also forecast the 10-year yield to fall to 2.75% by the end of the first quarter of 2009, as compared to previously estimated 3.5%.

“The combination of weaker real activity and slower inflation means that profits of U.S. companies will fall even more sharply than we had previously expected,” Goldman reports.

Goldman now sees economic profits falling 25% in 2009 on an annual average basis, the biggest drop since 1938. It had earlier expected a fall of 20%.

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