Goldman Cuts S&P 500 Profit Forecast, Citing Economic Slowdown

David Kostin, who leads Goldman's New York-based portfolio strategy team, cut his 2008 S&P 500 profit forecast by 9.7 percent to $65 and his 2009 estimate by 9.3 percent to $68.

asr: $65/500 => 12 cents /company on avarge for whole year 2008 , that is for each company in S&P 500

``The reduction incorporates a weaker economic outlook than previously assumed, greater estimated losses for the financial sector, and weak third-quarter earnings results and forward guidance,'' Kostin wrote in a note to clients.

``Financials writedowns and provisions continue to be the single most important driver of S&P 500 earnings,'' Kostin said. He estimated that global losses from writedowns and provisions will total $1.6 trillion through 2011, more than his prior projection of $1.3 trillion.

Goldman economists today forecast the deepest U.S. economic recession since 1982 after the unemployment rate climbed to a 14- year high and payrolls tumbled for a 10th month. The economy will shrink 3.5 percent in the fourth quarter and 2 percent in the first quarter, compared with previous estimates of 2 percent and 1 percent, economists led by Jan Hatzius wrote in a separate note.