Goldman Sachs Lifts 12-Month U.S. Recession Odds to 30%

Goldman Sachs has raised its estimate for the likelihood of a U.S. recession over the next 12 months to 30%, up 5 percentage points, citing a sharp rise in oil and natural gas prices, Odaily Planet Daily reported. The bank said the energy price shock, tighter financial conditions linked to the Middle East conflict, and the waning boost from last summer's major tax law changes under President Trump have worsened the outlook. Chief economist Jan Hatzius also lifted his baseline projection for the year-end unemployment rate to 4.6%. Goldman still expects the Federal Reserve to cut interest rates in September and December. It forecasts that U.S. GDP growth in the second half of this year will run below trend, with annualized growth seen at 1.25% to 1.75%. Earlier Monday, the bank raised its oil price forecast for this year, pointing to ongoing disruptions to energy transport through the Strait of Hormuz. Goldman said the conflict could push up global inflation and trim global GDP growth by 0.4 percentage points; in a worst-case scenario, the hit to GDP could be two to three times larger. (Jin10)