U.S. can avoid recession in 2023-Goldman Sachs
2022.12.27 10:58
U.S. can avoid recession in 2023-Goldman Sachs
Budrigannews.com – Goldman Sachs analysts said in a note to clients on Tuesday that the firm’s most out-of-consensus forecast for 2023 is that the United States will avoid a recession and continue moving toward a soft landing.
According to the analysts, the forecast reflects their belief that a period of below-potential growth is sufficient to gradually rebalance the labor market and alleviate wage and price pressures.
According to Goldman Sachs, “It also reflects our analysis that indicates that the drag from fiscal and monetary policy tightening will diminish sharply next year, in contrast to the consensus view that the lagged effects of interest rate hikes will cause a recession in 2023.” This is in contrast to Goldman Sachs’s assertion that this will occur in 2023.
In addition, they claim that the “quickly at little cost, with all of the decline in labor demand coming from a drop in job openings” first steps of the rebalancing process this year have been very successful. The analysts, on the other hand, believe that there is “much further to go in 2023.”
The analysts went on to say that the supply chain recovery and the deflationary impulse that it promised to bring to the goods sector took a lot longer than expected to arrive, but that it has finally arrived. They expect this ongoing process to “push core goods inflation negative next year, driving most of the decline in overall.”
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According to Goldman Sachs, “This should help to push elevated short-term inflation expectations back toward normal levels.” We anticipate the FOMC to raise rates by 25 basis points in February, March, and May, and to maintain a range of 5-5.25% for the remainder of 2023.”
“We do not anticipate this to happen next year, and we are skeptical that the FOMC will cut the funds rate until the economy is threatening to enter a recession.”
