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Goldman Sachs We’re HURTLING TOWARDS A VERY SEVERE RECESSION Several Major Economic Powers Are Too
Silver Report Uncut
Jul 10, 2022
To provide context around the current economic environment in a report titled “Revisiting Recession Facts” The only thing to watch is when the Fed will i) cut rates back to zero, ii) resume QE and/or iii) cut rates negative.
The report’s bottom-line detailed some of what we are seeing today — economic overheating and large increases in rates — suggests that the world could be on the brink of a rather severe recession.”
That said, the bank highlights several other aspects of the current environment which provide a buffer against a notable turndown in activity. The only thing to watch is the monetary response, i.e., when the Fed will i) cut rates back to zero, ii) resume QE and/or iii) cut rates negative.
Goldman’s subjective recession probabilities are significantly higher than the average 15% annual unconditional probability of advanced economies to enter a recession since the 1960s. The unemployment rate has risen by 2.7% in the median advanced economy recession since the 60s with larger increases in the 1980s and the UK but smaller increases in Japan.
The distribution is slightly skewed towards larger increases in more severe recessions.
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