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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Venkie who wrote (42543)	9/25/2001 9:55:29 AM
From: stockman_scott	Respond to of 65232

Investment bank Goldman Sachs Tuesday warned it may further downgrade economic forecasts for the U.S. as the already-cut forecasts were "optimistic." Goldman Sachs last Friday sharply lowered its economic forecasts for the US, saying it expected real gross domestic product growth to contract in the third and fourth quarters of 2001, by 0.5% and 2.5% respectively. It On Friday it also cut its forecast for GDP growth in 2001 to 1% from an earlier estimate of 2%. It cut its GDP growth forecast for 2002 to 0.5% from 2% previously. In his first public address since the Sept. 11 terrorist attack in the U.S., Goldman Sachs chief U.S. economist William Dudley said, "We can imagine a scenario that's quite a bit worse than this." "A second terrorist attack would be particularly damaging even to business and household confidence in the U.S.," he said. "Second, if we don't get the fiscal stimulus package that we're expecting, and Congress can't agree on the composition of what the fiscal stimulus package should look like, I think that will also cause us to downgrade our forecast." "And of course, if the U.S. equity market were to continue to sink rather than recover, which is our expectation ... that would also make us more pessimistic about the U.S. outlook," Dudley added. However, he said Goldman is predicting a US$60 billion to $80 billion tax cut package to be passed by Congress in the next three to six weeks, to help stimulate the economy. Dudley stressed the bank was already poised to downgrade its forecasts before the Sept. 11 disaster. "(But) if the U.S. economy was not in recession prior to September 11 it is in recession now," he added. -By Liz Rudall, Dow Jones Newswires; 852-2802-7002; elizabeth.rudall@dowjones.com (END) DOW JONES NEWS 09-25-01