Goldman Raises US Recession Odds. Cuts Growth Outlook

Goldman Raises US Recession Odds. Cuts Growth Outlook

The implied outlook for US economic growth is now "somewhat worse." That's according to Goldman, who, in a carefully worded note, cut its forecasts for the world's largest economy citing, among other things, a more aggressive Fed. Joseph Briggs said the steeper rates path, in conjunction with tighter financial conditions, points to slower growth and higher unemployment next year. Terminal rate pricing ratcheted higher in the wake of inflation data which suggested underlying price pressures w
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6 thoughts on “Goldman Raises US Recession Odds. Cuts Growth Outlook

  1. Will bearish sentiment prove to be as transitory as inflation? Reading your post, it sort of feels that way. Yet, last night, Nashville, where I live, was smoking. The recently opened Conrad and Hyatt Regencies were doing good business, and the hot new Halls Chophouse was slammed full, with a Rolls Royce and Sterling convertible among the more plebeian Teslas and Mercedes being guarded by the Valet troops. Even the Tennessee masses seemed to be in high-gear party mode, with Lower Broadway Street closed to accommodate the overflowing Honky Tonks. Saw similar revelry in Miami last week. What’s it like further north on Florida’s east coast? I’m guessing economic anomalies are becoming regional norms. Deciphering the economy has morphed more a local phenomena. And that could seriously stymie the economic prognostication business.

    1. I’ve seen quite a few folks post these sorts of anecdotes over the past several months. While (obviously) welcome, I’d gently suggest they aren’t all that useful in drawing conclusions about the rate of change in overall real output. Also, even if the unemployment rate rose “all the way” to 5.5%, that’d be peanuts compared to every historical US recession with the exception of 2001 and 1970. You could (pretty easily) suggest that if the Fed were really interested in getting inflation back down to target expeditiously, the unemployment rate needs to be north of 7%.

      I was a regular (and by “regular” I mean fixture) of the local high-end bar scene in a second-tier US city after Lehman. There was never any obvious sign that something was amiss in the US economy.

      Let’s be clear on something because I think this might help: A situation where everyday people, in everyday experience, see unequivocal evidence of recession while going about their daily lives isn’t a recession. It’s a depression. With a “d.”

      1. H.,

        Nice to read someone bold enough to write the letter “d” though “D” might be even better. The art symbol I see as best for the depicting the comment preceding yours would be the original cover art for “The Great Gatsby”. Party time again. Eerily appropriate.

  2. Low unemployment, student loans payments being suspended, side gigs while working from home, and stimulus payments have helped people reduce the proportion of income going to debts. I could see a lot of people living as though nothing is wrong while racking up new credit card debts. Just because restaurants are busy doesn’t mean people are financially doing well. Appearances are the last shoe to drop.

    I once heard about the “new underwear” barometer for the economy. In which you could tell how well households are doing by how much new underwear they buy (since it’s an article of clothing that isn’t visible to the public). Part of me wonders how to get these numbers and what they look like over 2022.

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