The U.S. will probably stick a soft landing next year: the world’s largest economy is forecast to narrowly avoid a recession as inflation fades and unemployment nudges up slightly, according to Goldman Sachs Research.
Our economists say there’s a 35% probability that the U.S. tips into recession over the next year, an estimate that’s well below the median of 65% among forecasters in a Wall Street Journal survey. The U.S. may avoid a downturn in part because data on economic activity is nowhere close to recessionary. GDP grew 2.6% (annualized) in the third quarter, according to an advance report. The country added 261,000 jobs last month.
“There are strong reasons to expect positive growth in coming quarters,” Jan Hatzius, head of Goldman Sachs Research and the firm’s chief economist, wrote in the team’s 2023 Outlook. Real personal income (adjusted for inflation) is springing back from the drop during the first half of the year when fiscal tightening and a sharp increase in inflation took their toll. Our economists expect real disposable income to increase to a pace of more than 3% over the next year. Even as financial conditions have tightened and are now subtracting about 2 percentage points from growth, the rise in real income is likely to be the stronger force next year.
The U.S. experience in the 1970s and early 1980s underscores that the shock of central bank tightening to contain inflation can cause a jump in unemployment. This time could be different, in part because overheating in the job market has shown up since the pandemic as an unprecedented increase in job openings rather than in excessive employment.
https://www.goldmansachs.com/insights/pages/outlook-2023-us-expected-to-escape-recession.htmlInteresting.
