Goldman Sachs: 3 reasons for a US recession & 4 steps to avoid one

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Goldman Sachs: 3 reasons for a US recession & 4 steps to avoid one

<p>Via Goldman Sachs economists:</p><p>We still see a 35% probability that the US economy will enter a recession in the next 12 months. This is more than double the unconditional probability in any given 12-month period because </p><ol><li>inflation is far above target, </li><li>the Fed is tightening aggressively, </li><li>and we live in an exceptionally uncertain world in terms of both domestic US politics and geopolitics. </li></ol><p>However, our 35% recession probability is well below the 60-70% consensus in the latest Wall Street Journal forecaster survey because we still see a very plausible four-step path from the high-inflation economy of the present to a low-inflation economy of the future without a recession. </p><p>The steps include </p><p>a) bringing growth down to below-trend but positive rates, </p><p>b) rebalancing the labor market with only a limited increase in unemployment, </p><p>c) reducing wage growth to more sustainable levels, </p><p>and d) putting PCE inflation on a path back down to 2%.</p>

                This article was written by Eamonn Sheridan at forexlive.com.

Source: Goldman Sachs: 3 reasons for a US recession & 4 steps to avoid one

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