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According to Goldman Sachs experts, the US is likely headed towards a recession, and there’s a “narrow path” to avoid it.
Let’s back up just a second – the US economy is “overheated,” with a ton of money flowing into the economy from things like COVID stimulus checks and low interest rates. And eventually, the bubble has to burst. According to the Goldman report, there needs to be a “necessary growth slowdown” to reduce wage growth and lower inflation closer to the Fed’s 2% target. On top of that, the company’s economists have revised their US GDP growth expectations for the year down to 2.4% from 2.6%.
Goldman Sachs Senior Chairman Lloyd Blankfein explained that this is happening right now, and he said that both consumers and company heads need to brace themselves.
“If I were running a big company, I would be very prepared for it,” said Lloyd Blankfein, on CBS’s “Face the Nation” on Sunday. “If I was a consumer, I’d be prepared for it.”
According to company insights in late April, Goldman Sachs economists said “historical patterns deserve some weight, and the overheated job market has caused a meaningful increase in the risk of recession.”