SPY

SPDR S&P 500

388.59
USD
-0.38%
388.59
USD
-0.38%
362.17 479.98
52 weeks
52 weeks

Mkt Cap 354.10B

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Goldman cuts U.S. GDP forecasts as financial conditions tighten

Goldman Sachs is lowering its expectations for the U.S. economy, while boosting its jobless forecast. Goldman now expects GDP annual growth of 2.4% in 2022, down from 2.6%, with 2023 growth of 1.6%, down from 2.2%. "Since we introduced our framework, our FCI has tightened by over 100bps and the GDP impulse from our FCI has turned more negative and implies a large drag on growth from 2022Q2-2023Q2," Goldman chief economist Jan Hatzius wrote in a note Monday. "While not all of this tightening can be directly attributed to the FOMC’s more hawkish policy stance, we now think that the current level of our FCI index reflects an amount of priced tightening that is in the ballpark of what is ultimately needed to restore balance to the labor market and cool the economy." "We therefore expect that the recent tightening in financial conditions will persist - in part because we think the Fed will deliver on what is priced - and therefore see a growth downgrade as appropriate." "Although we continue to expect that momentum in job gains will push the unemployment rate to a low of 3.4% in the next few months, we now expect that the unemployment rate will subsequently rise back to 3.5% at end-2022, and rise further to 3.7% at end-2023," Hatzius added. Goldman equity strategist David Kostin downgraded his outlook for the S&P 500.

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