Goldman Sachs Raises Likelihood of U.S. Economic Recession to 30%

BlockBeats News, March 24th, Goldman Sachs said that due to the surge in oil and natural gas prices, the probability of the U.S. economy falling into a recession in the next 12 months has increased to 30%, up 5 percentage points from previous expectations. The energy price shock, combined with financial tightening from the Middle East conflict, and the waning effects of the major tax law passed by President Trump last summer, prompted Goldman Sachs' chief economist Hatzius to raise his baseline forecast for the year-end unemployment rate to 4.6%.

Goldman Sachs still expects the Fed to cut interest rates in September and December. The bank also expects U.S. GDP growth in the second half of this year to be below trend, with an annualized growth rate expected to be between 1.25% and 1.75%. Due to the ongoing disruption in energy transportation through the Strait of Hormuz, Goldman Sachs raised its oil price forecast for this year earlier on Monday. The bank said that this conflict will push global inflation higher and lower global GDP growth by 0.4 percentage points, but in the worst-case scenario, the impact on GDP could double or even triple. (FXStreet)