VIEW: Goldman Sachs: Build Back Better Unlikely to Pass; Lower GDP Forecast

Goldman Sachs note that “Sen. Joe Manchin (D-W. Va.) 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).”