Goldman Sachs on US recession risk, in brief:
- 30% probability of entering a recession over the next year (vs.15%previously)
- and a 25% conditional probability of entering a recession in the second year if we avoid one in the first year,
- implying a 48%cumulative probability at a two-year horizon (vs.35%previously)
Citing:
- our baseline growth path is now lower
- we are increasingly concerned that the Fed will feel compelled to respond forcefully to high headline inflation and consumer inflation expectations if energy prices rise further, even if activity slows sharply.
- The war and further commodity price shocks have admittedly made the echoes of the 1960s and 1970s ring louder.
- But we are skeptical that hot wage growth and high inflation expectations are as entrenched today as back then.
Info via Reuters reporter.
