Goldman Sachs report a warning to the Obama administration

James Pethokoukis writing at Reuters quotes at length from a new report by Goldman Sachs that, he says, dropped an economic bomb on President Obama's chances for reelection." The report offers a doleful estimate for unemployment by election 2012 while advancing the possibility of a double dip recession: Following another week of weak economic data, we have cut our estimates for real GDP growth in the second and third quarter of 2011 to 1.5% and 2.5%, respectively, from 2% and 3.25%. Our forecasts for Q4 and 2012 are under review, but even excluding any further changes we now expect the unemployment rate to come down only modestly to 8¾% at the end of 2012. The main reason for the downgrade is that the high-frequency information on overall economic activity has continued to fall substantially short of our expectations. ... Some of this weakness is undoubtedly related to the disruptions to the supply chain-specifically in the auto sector-following the East Japan earthquake. By our...(Read Full Post)