Goldman Sachs Says Don’t Worry About Recession
Many top executives running big companies and people in Wall Street are worried about an impending recession, but not Goldman Sachs. The leading economist in the company says that they are not very concerned at all about a recession in the global economy. They also are of the opinion that the US is least likely to be impacted by a recession when compared to the past due to the ‘Great Moderation.’ It refers to the period between the 1908’s to 2007 when there was relative calm in the economy after the great inflation volatility. Goldman Sachs is of the opinion that the country’s economy is robust enough to withstand any shocks due to slow growth in the economy.
What Jan Hatzisu says in his research?
The chief economist of Goldman Sachs said in his research note that ‘A look back of 100 years of US recession suggests that several of the most important causes are less threatening today. While some new risks have emerged, on the net we see the US economy as structurally less recession-prone than in the past.
It was further added in the note that the causes of earlier recessions which were the fiscal tightening, industrial shocks, oil shocks, imbalances in inventory and finances, inflation are not a threat to the economy today. He further added that the only threat among these which can pose a huge risk is the financial imbalances. However, he wrote in his research that ‘Risk from the financial imbalances sees to be in abeyance at present, partly because of crisis-induced caution on the part of households, firms, and regulators.’
Jan Hatzisu also noted that the private sector is in better shape financially and is less reactive to the tightening of lending or reduction in asset prices than earlier. He concluded his research note is saying that ‘While new risks could emerge, none of the main sources of recession seem to be of concern for now. As a result, the prospects of a soft landing look better than widely thought’.
Though Goldman Sachs thinks that there is no fear of recession, many other top minds don’t agree to this. CEO of J.P Morgan Chase, Jamie Dimon opined that the economy could face some rough weather if policies are not fixed properly, Seth Klarman who is a leading Hedge Funder said that a crisis is in the pipeline and investor Ray Dalio also said that there is a risk of recession in 2020.