Economists from Goldman Sachs said on Monday that the probability of a recession in the next year is higher than they last previously predicted, as other executives have warned of economic uncertainty ahead.
The economists said in a note they were raising the likelihood that there would be a recession over the next year from 15 percent the last time they weighed in to 30 percent now.
They also predicted lower gross domestic product (GDP) growth for both 2022 and 2023: 2.4 percent on an annual average basis compared to 2.5 percent for 2022, and 1.4 percent in 2023 compared to 1.6 percent.
“We now see recession risk as higher and more front-loaded,” the economists wrote. “The main reasons are that our baseline growth path is now lower and that we are increasingly concerned that the Fed will feel compelled to respond forcefully to high headline inflation and consumer inflation expectations if energy prices rise further, even if activity slows sharply.”
The development comes as Tesla CEO Elon Musk said in an interview on Tuesday that “a recession is inevitable at some point,” saying it “is more likely than not” there will be a recession in the near term.
Before the Federal Reserve hiked up interest rates at its fastest pace in nearly three decades, JPMorgan Chase chief executive Jaime Dimon earlier this month predicted an economic “hurricane.”
“That hurricane is right out there down the road, coming our way. We just don’t know if it’s a minor one or Superstorm Sandy or Andrew or something like that, and you better brace yourself,” he said at the time.
The United States has suffered high inflation in addition to enduring supply chain issues, impacted by the COVID-19 pandemic. The ongoing Russian invasion in Ukraine has complicated matters, affecting prices of some goods in addition to the supply chain of certain goods.
In a recent interview with The Associated Press, President Biden tried to stress some optimism and argued that a recession is not “inevitable.”
“Be confident, because I am confident we’re better positioned than any country in the world to own the second quarter of the 21st century,” Biden told the AP. “That’s not hyperbole, that’s a fact.”