Citigroup cuts US economic growth estimates

19 August 2011

Expansion of the US economy across 2011 and 2012 may be less speedy than previously anticipated, it has been suggested.

A report from Citigroup has warned fiscal tightening measures and possible political paralysis could stunt such growth, leading to the brokerage to reduce its 2011 gross domestic product (GDP) forecast from 1.7 per cent to 1.6 per cent, Bloomberg reports.

In addition, the lender also cut its 2012 GDP prediction, slashing it from 2.7 per cent to 2.1 per cent.

Analysts at Citigroup - which is an official sponsor of the 2012 US Olympic team - Steven Wieting and Shawn Snyder noted growth speed is not so slow as to suggest a new cyclical recession, but does suggest a full recovery may be out of reach.

"We see corporate profits growing at a quite low single-digit pace in coming years even with the assumption of continued economic expansion," they wrote.

The duo also amended their estimates for the Standard and Poor's 500 Index's earnings-per-share in 2011 from $98 to $97.

By Claire Archer

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development