Jan Hatzius, the chief economist at Goldman Sachs, spoke with CNN in an interview.
- “We don’t expect a recession”
- says a 35% chance of a recession (the consensus on Wall Street is roughly 65%)
- “Our baseline is a soft-landing.”
GS cite a strong jobs market:
- does not see the economy losing jobs on a monthly basis at all this year
- but monthly payroll growth could slip below 100,000
And inflation coming under control:
- expects inflation to 2% to 3% range by late this year or 2024.
- “I think inflation has pretty clearly peaked,” Hatzius said, adding that he has “relatively high confidence” on that call
But, there is a big risk to the no recession forecast:
- “If there were any doubt about the US government’s ability or willingness to make interest and principal payments on time, that could have very, very adverse consequences,”
- Asked if a default or even a near default could cause a recession, Hatzius said yes.
- “That is the worry: That you get turmoil in financial markets, a big tightening in financial conditions and that adds to downward pressure on economic activity,” he said. “That is certainly the worry. It’s not our expectation. ... We think ultimately a solution will be found,” Hatzius said. “These solutions are often found at the very last moment.”
