Goldman Sachs Raises Recession Probability for US Economy within 12 Months

03/16/2023 05:01 • AI Insights • 99 views

According to reports, Goldman Sachs has raised the probability of the US economy falling into recession within the next 12 months by 10 percentage points to 35%.

Goldman Sachs raised the probability of a recession in the US economy within a year by 10 percentage points to 35%

Analysis based on this information:

Goldman Sachs has reportedly increased the likelihood of the US economy plunging into a recession within the next year by 10 percentage points from their initial projection of 25% to 35%. The investment and financial services company cited a correlation between surging tariffs and trade wars, which could lead to reduced investment and an imminent downturn in the economy.

With a trailing GDP growth rate of 2%, economists predict that the escalation of trade conflicts between China and the US, in addition to the risk of a global economic slowdown, could be detrimental to the US economy. This prediction put forward by Goldman Sachs is consistent with the grave warnings issued by the Federal Reserve Bank that predicted a similar economic crisis by the end of 2020.

The US-China trade dispute was the main driver for the recent spike in recession probability, with the investment bank warning that businesses will continue to delay investment, leading to lower employment and growth rates. The uncertainty caused by the ongoing negotiations between the two countries has resulted in significant fluctuations in the stock market, which is reacting to any development or setback.

It should be noted that Goldman Sachs’ report is an analysis of probabilities and not a definitive fact. The economy may avoid a recession, but the warning alerts investors to be cautious in the current business and economic climate. The predicted 35% probability for a recession represents the highest chance reported since the last global financial crisis in 2008; thus, businesses and individuals must exercise prudence in their planning and investment strategies.

In conclusion, Goldman Sachs has raised the probability of the US economy plunging into a recession within 12 months from 25% to 35%. This increased probability comes as a result of the potential escalation of the US-China trade war and the uncertainties involved in the negotiations. This report and prediction must be considered as a warning to investors and businesses to exercise caution while planning and investing in the current economic landscape.

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