Goldman Sachs gives the US economy a 30% chance of falling into recession next year, up from the previous forecast of 15%, amid record inflation and weak macroeconomic data fueled by the Russian invasion of Ukraine.
The estimates come just a week after the US Federal Reserve raised interest rates more sharply since 1994 to stem inflation, and several other central banks have also taken aggressive measures to tighten monetary policy.
Goldman Sachs also downgraded US GDP forecasts below convergent estimates for the next two years to capture the slowdown in the economy.
“The Fed has raised interest rates more aggressively, interest rate expectations have risen and financial conditions have tightened further and are now significantly lagging behind growth – slightly more than we think is necessary,” Goldman Sachs economists said. .
The investment bank predicts a 25% chance of the US economy going into recession in 2024 if it avoids it in 2023, adding that this means that there is a cumulative 48% chance of a recession in the next two years compared to the previous estimate of 35%.
“We are increasingly concerned that the Fed will feel compelled to respond vigorously to high inflation and inflation expectations if energy prices rise further, even if activity slows significantly,” he added.
Source: Capital
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