The latest economic outlook from Goldman Sachs is pretty similar to my current perspective – the economy will muddle through, but will not sink into recession.  Goldman is forecasting about 2% growth for the remainder of the year and an elevated unemployment rate (via James Pethokoukis):

“We estimate 2.2% real GDP growth (annualized) in Q2 and 2% in Q3, slightly below the first-quarter pace. Incoming news on activity has been weaker than expected on net since the first week of March. We suspect that some of the recent softness reflects a “payback” after a boost to growth from unusually warm weather throughout the winter. … A slow recovery has started in the housing market. Home sales and residential construction activity have bottomed, and we expect positive growth over the next two years. However, gains are likely to remain modest, at least in the singlefamily market … We forecast that US house prices will slip another 1.5% this year before stabilizing in 2013. … We expect the unemployment rate to drift sideways, ending 2012 at 8.2%. Our forecast entails growth that is near the US economy’s potential rate this year, suggesting little progress reducing unemployment. We forecast that the labor force participation rate will stabilize this year, at least temporarily, as improving cyclical momentum offsets underlying weakness stemming from demographic trends.”

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  1. Didn’t Goldman also predict $300 oil right when oil peaked around $150 in 2008? Why is everyone always make predictions that usually don’t pan out? then everyone else forgets the “experts” who made the bad predictions to begin with.

  2. Quite frankly, this muddle through already looks like a permanent recession, so the distinction may be largely academic. Still, I wonder if the fact that the US has created $2.5 of debt per each $1 of GDP will come back to bite at some point …

    • Not per MMR. Sovereign debt is just a scoreboard operation up until the point it is inflationary.

      • Yes, inflation is always the true constraint. There’s no such thing as an autonomous currency issuer not being able to meet its debt obligations.

    • Isn’t it funny how she says “US debt” and SF know it is a reference to Gov debt. When the actual problem is private sector debt which hit 300% of GDP and yet no one talks about that.