Goldman Sachs President: ‘The risk of US recession is very high’

On the CBS program on May 15, Blankfein said that the risk of the US economy heading to a recession is now “very, very high” and this is “no longer speculation”. “If I’m running a big company, I’ll prepare for that,” he advises. “If I’m a consumer, I’ll do the same.”

However, he said that the US still has a “narrow door” to exit. He commented that the US Federal Reserve “has very powerful tools” to control inflation” and “have reacted well”.

Blankfein said that the government’s massive stimulus packages to ease the economic impact of the pandemic, as well as supply chain problems, the blockade in China and the war in Ukraine contributed to the high inflation. .

High fuel prices and shortages of formula show that American life is not easy. Consumer confidence in the country fell at the beginning of the month, to its lowest level since 2011. The consumer price index rose 8.3% in April year-on-year, slowing from March but still at the highest level in the past few decades.

Blankfein’s comments come on the same day that the bank’s economists downgraded their US growth forecasts for this year and next, due to recent volatility in financial markets. The Goldman team now thinks that US GDP could grow by only 2.4% this year and 1.6% next year. These figures fell from previous forecasts of 2.6% and 2.2%.

This is the “necessary slowdown” to cool wage growth and contain inflation, the report said. While this could lift the unemployment rate, Goldman is optimistic that it won’t get too high.

Blankfein asserted that although inflation “will ease somewhat” when supply chains are less congested and blockade orders because of Covid-19 in China are eased, “some things will remain high, like energy prices. “.

Ha Thu (according to Bloomberg)