The American economy continues to look gloomy and signals
pointing toward a looming recession continue to appear. In a note sent
to clients this week, Goldman Sachs’ chief economist said the bank
envisions the “odds of a recession as roughly 15% in the next 12 months
and 35% within the next 24 months.” Furthermore, the renowned financial
expert John Mauldin details that he would not be surprised if the stock
market crashed by 40%, as he believes a recession is likely due this
year.
Goldman Prediction: ‘Odds of a Recession Roughly 15% in the Next Year, 35% Within the Next 24 Months’
The U.S. economy is dealing with significant pressures as supply
chains are restricted and consumer prices are soaring amid war taking
place overseas in Europe. Just recently, Bitcoin.com News reported on last month’s consumer price index data that had shown America’s inflation rate increased sharply to 8.5% in March.
A couple days later, our newsdesk explained how the hedge fund manager Michael Burry believes the U.S. Federal Reserve has no intentions of fighting inflation. Moreover, the famed author, Robert Kiyosaki, thinks hyperinflation and depression are already here.
In a note sent to investors this week, Goldman Sachs’
chief economist Jan Hatzius detailed Goldman’s forecast and the
probability of the U.S. falling into a recession. Hatzius said the
Federal Reserve faces a “hard path to a soft landing” and Goldman
expects the chances of a U.S. recession to be 35% over the next two
years.
“Our analysis of historical G10 episodes suggests that although
strong economic momentum limits the risk in the near-term, the policy
tightening we expect raises the odds of recession. As a result, we now
see the odds of a recession as roughly 15% in the next 12 months and 35%
within the next 24 months,” Hatzius explained.
Hatzius further detailed that historical patterns are showing the
economy could get rocky. He noted that 11 out of 14 economic cycles
since World War II have led to a recession within a 24-month period.
“Taken at face value, these historical patterns suggest the Fed faces a
narrow path to a soft landing as it aims to close the jobs-workers gap
and bring inflation back towards its 2% target,” Hatzius added.
Bridgewater Associates Founder Ray Dalio Expects a ‘Period of Stagflation’
Goldman’s chief economist is one of many predicting a downturn in the
U.S. economy in the coming months. Over the last few months, a great
number of financial analysts and economists have been attempting to
predict the U.S. economy’s future.
During an interview with Yahoo Finance published on April 4, Ray Dalio,
Bridgewater Associates founder, and co-chief investment executive, said
he envisions a stagflation environment. Dalio remarked:
So what you have is enough tightening by the Federal
Reserve to deal with inflation adequately, and that is too much
tightening for the markets and the economy. So the Fed is going to be in
a very difficult place a year from now as inflation still remains high
and it starts to pinch on both the markets and the economy. I think that
most likely what we’re going to have is a period of stagflation. And
then you have to understand how to build a portfolio that’s balanced for
that kind of environment.
Best-Selling Author and Financial Expert John Mauldin: ‘My Instinct Tells Me This Will Not Be a 12-Month Wait’
The well known financial expert John Mauldin is predicting an economic downturn
as well, as he recently explained that he would not be surprised if the
stock market crashed by 40%. “[Fed chair Jerome] Powell and his crew
hope to engineer the fabled ‘soft landing,'” Mauldin opined. “I really
doubt they can do it,” he added.
Mauldin remarked on how the 2-year Treasury yield recently surpassed
the 10-year Treasury yield, which recorded an inverted yield curve.
“That’s the opposite of normal. Then again, a bunch of things have been
the opposite of normal lately,” Mauldin said. The financial analyst is
known for predicting the U.S. recessions that occurred in 2000 and 2008,
and he believes the tell-tale signs are no different. “We have many
indications recession is near,” the blog post written by Mauldin notes.
The financial analyst’s blog post concludes by stating:
There is absolutely no way to precisely predict when a
recession begins. My instinct tells me this will not be a 12-month wait.
I think things just continue to slow down and one day we’ll look up and
see a recession. And then a little bit later we’ll be growing again.
That’s how these things work.
