US GDP forecast lowered to 5.7% for 2021: S&P
Near-term health of US economy remains strong, less impact felt with each wave of virus, agency says
S&P Global Ratings revised down the US' gross domestic product (GDP) growth forecast for 2021 to 5.7%, from its previous estimate of 6.7%.
The US' GDP estimate for 2022, on the other hand, was revised up to 4.1%, from the agency's 3.7% projection made in its June report.
The global rating agency said in a report late Thursday that supply disruptions remain a major obstacle for the world's largest economy, and the delta variant of the coronavirus is an additional drag for the economy.
However, the near-term health of the US economy remains strong, S&P said.
"US economy has felt less impact with each wave of the virus and has been able to withstand the damage. We maintain our assessment of US recession risk over the next 12 months at 10%-15% -- our lowest assessment in six years," it added.
The agency noted that the country is close to herd immunity with 55% of Americans fully vaccinated as of Sept. 20.
About the Federal Reserve's tapering, the process of scaling back its $120 billion worth of monthly bond purchases, S&P said it expects it to start in December, after the central bank announces it in November.
The agency said it expects the Fed's first raise in interest rates would come in December 2022, followed by two rate hikes each in 2023 and 2024.
S&P said it views government debates on infrastructure, funding, and the debt ceiling as near-term risks, while high level of corporate debt is a concern in long-term.