Goldman Sachs Researchers believe the risk of recession in the United States is lower in 2023  at 35%, says a briefing. 

 

The report comes amid consensus estimates that put the probability of a recession in the next 12 months at 65%. 

 

“Our most out-of-consensus forecast for 2023 is our call that the US will avoid a recession and instead continue progressing toward a soft landing,” David Mericle, Goldman Sachs chief US economist, and Alec Phillips, Goldman Sachs chief US political economist, wrote in a recent report.

 

Mericle expects the jobs-workers gap — defined as total labor demand minus total labor supply — to narrow steadily next year, due mainly to a further drop in job openings but also to a limited increase in the unemployment rate to just over 4%.

 

The long-awaited recovery of supply chains is likely to push core goods inflation into negative territory this year, driving most of the decline in overall core inflation, according to Mericle.

 

Phillips sees the risk of a recession and the need to raise the debt limit as the two factors that have the potential to influence fiscal policy changes in 2023. However, major changes are unlikely, he says. 

 

Inflation may have peaked in 2022

Not only did global inflation increase rapidly in 2022, but forecasts increasingly missed the mark. An “inflation surprise” is the difference between the actual inflation rate and the median of forecasts collected a month before the data release. In early 2022, those inflation surprises kept getting bigger.

 

But now the gaps seem to be getting smaller. Over that last few months, global inflation surprises have swung broadly negative, indicating price increases have cooled more than many economists expected. - TradeArabia  News Service