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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Forecast: Unemployment To Hit 8.5 Percent By Next Year

In a research note today, Goldman Sachs Group Inc. predicted that the U.S. economy will hit its worst recession since 1982 next year, with the unemployment rate soaring from its current level of 6.5 percent to 8.5 percent by the end of 2009.

Jan Hatzius, head of the Goldman group, said that the U.S. economy, as measured by the Gross Domestic Product (GDP), will shrink by 3.5 percent in the fourth quarter of this year, as the full effects of the third quarter take hold.

GDP will decrease by another 2 percent in the first quarter of 2009, Goldman said. Both estimates are worse than previously expected.

It's worth noting that Goldman's predictions are more bearish than most of its peers.

A Bloomberg News survey of economists forecast a median .4 percent contraction in the fourth quarter of this year and growth of .5 percent in the first quarter of 2009. The U.S. economy managed to grow at a rate of .3 percent for the third quarter of this year.

Goldman is the alma mater of Treasury Secretary Hank Paulson and Neel Kashkari, the man running the government's $700 billion+ bailout/rescue plan.

-- Frank Ahrens

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By Frank Ahrens  |  November 10, 2008; 2:01 PM ET
Categories:  The Ticker  
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Comments

Sheesh, Frank, if you are going to publish a reworded press release as news, at least reword it properly. The percentages given are ANNUALIZED RATES!

Here's Bloomberg, who got it right:
"Goldman Sachs Group Inc. economists led by Jan Hatzius are even more pessimistic, predicting the economy will shrink at a 3.5 percent annual rate in the fourth quarter and at a 2 percent pace the next, according to a Nov. 7 note to investors."

Posted by: Jenny6 | November 10, 2008 2:19 PM | Report abuse

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