Goldman Sachs sees a 30% chance the US economy will slip into recession over the next year, up from its previous forecast of 15%, amid record inflation and a weak macroeconomic backdrop fueled by Russian invasion of Ukraine.
The latest forecast comes a week after the Federal Reserve approved its biggest interest rate hike since 1994 to curb accelerating inflation and as other central banks also took aggressive steps to tighten policy. monetary politics.
Goldman Sachs has also lowered its US GDP estimates below consensus for the next two years, to reflect the drag on the economy.
“The Fed has advanced rate hikes more aggressively, terminal rate expectations have risen and financial conditions have tightened further and now imply a substantially larger drag on growth than we think is necessary,” Goldman economists said in a note late Monday.
Goldman Sachs forecast a 25% conditional chance that the US will enter a recession in 2024 if it avoids one in 2023, adding that this means there is a 48% cumulative chance of a recession in the next two years, up from its previous forecast of 35%. percent.
“We are increasingly concerned that the Fed will feel compelled to respond strongly to elevated consumer and headline inflation expectations if energy prices continue to rise, even if activity slows sharply,” he added.
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