Goldman's Hatzius slashes Q4 GDP forecast amid shutdown

|By:, SA News Editor

Thus far, the shutdown has trimmed 0.3% from Q4 GDP growth thanks to federal employee furloughs, reckons Goldman's Jan Hatzius, but the effect would be reversed in 2014 Q1 (assuming the shutdown ends). He adds another 0.2% decrease in growth thanks to the rise in uncertainty to come up with a downside risk of about 0.5% to his 2.5% Q4 GDP growth forecast.

Hatzius' note came out before the wrinkle of Democrats demanding the end of the sequester (automatic budget cuts) be part of any deal.

Thus far the shutdown - and apparent slower growth - has been of little benefit to long-term Treasury futures. They've been locked in a range surrounding 2.64% for weeks, and last week broke higher to 2.69%. The government bond market is closed today due to Columbus Day, but Treasury futures are marginally higher.

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