Forex Flash: US frontloaded sequester to drag growth – Goldman Sachs

According to the Economics Research Team at Goldman Sachs, we expect below-trend US annual growth of 1.8% in 2013 and an acceleration to 2.9% in 2014. Growth should then remain slightly above that rate in 2015 and 2016. On an annualized sequential basis, we expect a rebound to 2.8% in 2013Q1 and a slowdown to 1.5% and 2% in 2013Q2 and Q3, before a pick-up to 2.5% in the last quarter of the year.

Looking into 2014 and beyond, we expect above-trend growth at around 3%-3.5%. Our forecast for near-term weakness but long-term strength is based on competing impulses from the private and public sectors. “In Q2 and Q3, we expect the frontloaded ‘sequester’ to be a significant drag on growth, while in the intermediate and long term we see further strength in the private sector, led by the ongoing housing recovery, rising business investment and financial rebalancing in the household sector.” they warn.