HONG KONG (AFX-ASIA) - Goldman Sachs has cut its 2001 GDP forecast for the US from 2.0 pct to 1.0 pct after the Sept 11 terrorist attacks, its chief US economist William Dudley said. Goldman Sachs has also cut its 2002 US GDP forecast from 2.0 pct to 0.5 pct, he said. He said the GDP forecast is based on expectations that the terrorist attacks in the US were an isolated event. But if there were further terrorist attacks there, it will be a bigger blow to confidence as security is now tighter prior to Sept 11, he said. "The effectiveness of the US response to the terrorists attack is also significant." Dudley said that unlike the Gulf War, he was pessimistic that there will be a "nice closure" to the Sept 11 incident. "What the US is fighting against is different and it is difficult to see an end," he said. He said the terrorist attacks on Sept 11 have dealt a blow to both business and household confidence. Both the business and household sectors would now try to rebuild their financial liquidity and would prefer to hold cash or savings. Dudley sees the US Federal Reserve cutting rates further, with rates likely to ease to 2.0 pct by the end of the year, against 5.31 pct at the start of the year. But he said the financial conditions in the US had not improved despite the Federal Reserve's rate cuts as the stock market has not reacted positively. Dudley sees the unemployment rate in the US rising to 4.7 pct this year, and 5.8 pct next year.