While the bleak fiscal picture may be sapping the economy’s public sector of strength, the private sector is rebounding, says Jan Hatzius, chief U.S. economist for Goldman Sachs.

“Underneath the fiscal drag, the fundamentals in the private sector of the U.S. economy are improving,” he writes in a report obtained by Business Insider.

“The key force behind this improvement is the gradual normalization in the private-sector financial balance.”

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

That balance is the gap between total income and total spending — or alternatively between total savings and total investment.

“When the private-sector [financial] balance is high, the level of spending is low relative to the level of income,” Hatzius says. “A normalization then means that spending rises relative to income, providing a boost to demand, output and ultimately employment and income.”

Obviously that’s good for the economy. And the balance has plenty of room to fall further, he writes. It still stands at plus 5.5 percent of gross domestic product, more than 3 percentage points above its historical average.

The private sector’s positive impact on the economy will likely be interrupted a bit this quarter by Superstorm Sandy, economists say.

Among 45 respondents to a Wall Street Journal survey of economists, the consensus is that Sandy will take 0.2 percentage point off annualized GDP growth in the fourth quarter.

They predict a growth rate of 1.8 percent for the period, down from 2 percent for the third quarter.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown