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Goldman warns recession risks now higher and 'more front-loaded'
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Goldman Sachs economists warned on Tuesday that the odds of the U.S. economy tumbling into a recession next year are rising as the Federal Reserve ratchets up its fight to cool scorching-hot inflation.
In a new analyst note, the Goldman strategists – led by Jan Hatzius – said they see a 30% probability of recession over the next year, up from 15% previously, and a 25% chance of a recession in 2023 if one is avoided this year. That means there is, in total, a 48% chance of an economic downturn in the next two years.
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"We now see recession risk as higher and more front-loaded," Hatzius wrote in the note. "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."
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