WASHINGTON (AFP) - Investment giant Goldman Sachs said Wednesday the US economy is in recession or will soon be in a downturn stemming from housing and credit woes.
"The recent data suggest that the US economy is falling into recession," Goldman Sachs economists said in a research note.
"We expect economic activity to contract modestly through late 2008, followed by a gradual recovery in the course of 2009."
Goldman's views came two days after Merrill Lynch said a recession was "a present-day reality" for the world's biggest economy.
Goldman Sachs said it expects the Federal Reserve to cut interest rates aggressively, bringing the federal funds rate from 4.25 percent to 2.5 percent by late 2008.
Goldman Sachs cut its 2008 growth forecast for the US to 0.8 percent from 1.8 percent, and sees a US recession during the year with gross domestic product declining in the second and third quarters.
A recession is generally defined as two consecutive quarters of declining economic output.
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