'Weakening Underlying Growth' Factor in Slowdown: Goldman

Weakening underlying economic conditions -- and not just the temporary effects of high energy prices and supply disruptions from Japan -- could be to blame for the slowing pace of the once-robust economic recovery.

A flurry of gloomy economic data, from a monthly jobs report that fell far short of analysts' expectations, to data pointing to a 'double-dip' in housing prices, has led a slew of investment banks to slash forecasts for 2011-2012 economic growth.

Economists from across the spectrum have been begging the question of how large the effect of so-called "temporary factors" has been on slowing down the pace of recovery.

The two key factors economists tend to point to are high gasoline prices and lingering supply-chain disruptions caused by the earthquake and ensuing tsunami that slammed Japan in March. Indeed, several automakers were forced to temporarily idle plants, and therefore workers, due to a shortage in key electronics components for cars.

The prevailing view, initially, was that these temporary factors were merely a transitory blip on the road to economic recovery, however, sentiment has changed.

"Six months ago, we adopted a view that the economy was transitioning to a more self-sustaining recovery," economists at Goldman wrote in a note to clients Monday. "It hasn't happened."

The economists at Goldman now contend that the duo of temporary factors aren't fully to blame for the darkening economic picture.

"The implication is that we are looking at either a weaker underlying growth pace or a greater vulnerability to shocks than we had been assuming," they wrote.

Still, Goldman's economists remain somewhat optimistic, noting "many of the signs of 'healing' in the private sector that encouraged us in late 2010 are still visible."