Almost half a year after the across-the-board federal budget cuts known as sequestration went into effect, Goldman Sachs thinks it has finally found evidence that the cuts are affecting the economy.

In a note published early Wednesday morning, the bank said that sequestration is slowing down economic growth by holding back personal income growth, shrinking government employment, and hurting industries that cater to the federal government. But Goldman’s analysis of states particularly reliant on federal spending also suggests that the spending cuts have only had a “modest indirect effect on employment so far.”

In other words, it’s not hard to see that sequestration has been taking a toll on the federal government and contractors. But its impact on the broader employment situation is still not clear. While none of the doomsday scenarios predicted by some government officials earlier in the year have come to pass, the sequester may be slowing the pace of the recovery.

Alec Phillips, the Goldman economist who authored the report, wrote that the “area where sequestration has shown up fairly clearly” is in personal income data, which disappointed in July. Phillips attributes the decline to defense furloughs, which began on July 8, and predicts that the effect should be reversed in upcoming months as the furloughs end.

The ongoing drop in the number of federal workers is also a sign of the budget cuts, according to Phillips. Federal payrolls have fallen by 71,000 over the past year, with monthly job losses accelerating to 9,000 after sequestration. That trend could become more pronounced if sequestration cuts continue, Phillips warns.

But connecting the cuts to trends in the private sector remains difficult. The chart below shows the relationship between employment growth and exposure to sequestration cuts (on the x-axis).

"While it seems likely to us that there have been at least some indirect effects of federal spending restraint on the labor market, the effects remain concentrated in federal employment itself and in some industries with significant exposure to government spending,” Phillips writes.

The sequestration process took place as part of the 2011 debt ceiling debate, after mandated negotiations between Democrats and Republicans to find other ways of cutting the deficit broke down. It consists of about $80 billion in across-the-board cuts to all non-exempt discretionary and mandatory programs. It also includes caps on discretionary spending through 2021.