Most economists are expecting a recession to hit the U.S. in the next 12 months and company earnings growth to become stagnant in 2023, but Goldman Sachs is much more optimistic.
While economists polled by the Wall Street Journal forecast a 54% chance that the U.S. would see a recession in the next 12 months, Goldman Sachs recently lowered the chance of it happening to 20% from 25%. Hatzius also said the U.S. inflation is likely to continue to head down without requiring a recession.
In addition, some emerging market economies, such as Brazil, Chile, Poland and Hungary, which tightened their monetary policy more and faster than the U.S., have all seen a significant deceleration of inflation in recent months, noted Hatzius. “I think that bodes pretty well for the US and other advanced economies as well,” he said.
The major pillars of growth in the Chinese economy, such as property sector, infrastructure, investment and exports, are no longer viable, noted Mossavar-Rahmani. The country also faces great policy uncertainty, she added.