Goldman Sachs Group Inc. increased its estimates that the U.S. is heading into a recession by 35% over the next 12 months, according to Thursday reports.
The financial giant wrote in January that while the national consensus suggests the chance of a recession in the next 12 months is roughly 65%, the group’s internal economic analysis suggests there is only a 35% change. Goldman had initially dropped its forecast from 35% to 25% in February, but increased the risk in a Thursday research note, according to Forbes.
GOLDMAN SACHS: “We are raising our subjective probability that the US economy will enter a recession in the next 12 months by 10pp to 35%, reflecting increased near-term uncertainty around the economic effects of small bank stress.”
— James Pethokoukis (@JimPethokoukis) March 16, 2023
Chief U.S. economist David Mericle stated in January that Goldman’s disagreement with the consensus came from “our more optimistic view” regarding whether a recession is needed to tame inflation. It’s unclear why Goldman has decided their proprietary indicators of activity growth remain positive, especially as so many sectors are posting job losses and several financial institutions collapsed in March.
Goldman also shared an article in early March where their team suggested that oil prices could rise up to $107 a barrel by the end of 2023. The price at the time of writing was $84. Any increase in cost would be passed over to the consumer, naturally increasing the cost of every single thing we’re dependent on in a globalized world. (RELATED: ‘Ominous Market Warning’: BuzzFeed Stock’s Plummets)
Those employed by the bank also believe that there will be no Fed rate hike in March as a result of Silicon Valley Bank’s sudden collapse, and other turmoil within the stock market, Forbes noted.
Multiple financial experts spent much of 2022 forecasting the current economic crisis. One even went so far as to joke that he’d rather consume cyanide than deal with the impending financial crash.