The U.S. economy may grow less than previously forecast in 2011 and 2012 due to potential “political paralysis” and fiscal tightening steps, Citigroup Inc. wrote in a report.
The brokerage cut its 2011 gross domestic product growth forecast to 1.6 percent from 1.7 percent and lowered its 2012 GDP growth estimate to 2.1 percent from 2.7 percent, Steven Wieting and Shawn Snyder, analysts at Citigroup, wrote in a report dated Thursday. They also lowered their estimates for the Standard & Poor’s 500 Index’s earning-per-share this year to $97 from $98, and to $101 from $105 next year.
The positioning of the economy and pace of recovery so far “do not suggest a new cyclical recession, rather an inability to mount a full recovery,” they wrote. “We see corporate profits growing at a quite low single-digit pace in coming years even with the assumption of continued economic expansion.”
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