Goldman Sachs has lowered its US economic growth forecast

The news from earlier has killed Biden’s program for now:

US Senator Manchin said he won’t support the Biden “Build Back Better” plan

GS:

Manchin announced that he is a “no” on moving forward with President Biden’s Build Back Better (BBB) legislation.

BBB enactment had already looked like a close call and in light of Manchin’s comments we are adjusting our forecast to remove the assumption that BBB will become law.

While BBB in its current form looks unlikely, there is still a good chance that Congress enacts a much smaller set of fiscal proposals dealing with manufacturing incentives and supply chain issues.

There is also still a chance that Congress retroactively extends the expanded child tax credit, with some modifications, though we think the odds of this occurring are less than even.

In light of our changed fiscal assumptions, we are lowering our real GDP forecast for 2022: 2% in Q1 (vs. 3% prior), 3% in Q2 (vs. 3.5% prior), and 2.75% in Q3 (vs. 3% prior).

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Less fiscal stimulus ahead should take at least some heat out of rising inflation rates in the US and thus, at the margin, slow the pace of Fed rate hikes.