The US economy is in recession or will be very soon according to Goldman Sachs JBWere.
The investment giant's forecast follows comments from Merrill Lynch on Monday, which said that the recession was already a "present-day reality".
Goldman Sachs said that the slowdown would force the US Federal Reserve to lower interest rates from the current level of 4.25% to 2.5% by late 2008.
"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 Sachs has cut its 2008 growth forecast for the US to 0.8% from 1.8%, and is predicting a US recession during the course of the year with gross domestic product declining in the second and third quarters.
A slump on Wall Street last Friday from a sharp rise in the US unemployment rate led stock markets to slump around the world, with losses seen across nearly all sectors.
This global market crash was described by Merrill Lynch as the final proof that the long-dreaded recession has already begun.
