Goldman Sachs: "35% Probability of US Economy Recession Within 2 Years"

[Photo by EPA Yonhap News]

[Asia Economy Reporter Park Byung-hee] Goldman Sachs has analyzed that there is a 35% chance that the U.S. economy will enter a recession within the next two years.

According to Bloomberg News on the 17th (local time), Goldman Sachs analyzed that, based on historical cases, the current central bank, the Federal Reserve (Fed), faces the difficult task of conducting monetary policy tightening without triggering a recession.

Goldman Sachs economist Jan Hatzius particularly analyzed that the difficult challenge facing the Fed is narrowing the gap between jobs and labor supply. Currently, as the U.S. recovers from the COVID-19 phase, job demand is rapidly increasing while the supply of workers is insufficient. This has caused wages to rise sharply, stimulating inflation.

Economist Hatzius stated that historically, when the gap between jobs and labor supply is significantly reduced, a recession has occurred, and now it is very difficult for the Fed to guide a soft landing. He diagnosed that the Fed must reduce wage growth to meet the 2% monetary policy target while reducing job vacancies without a sharp rise in unemployment. Economist Hatzius predicted that the probability of the U.S. economy entering a recession within one year is 15%.

Since World War II, the U.S. has experienced 14 tightening periods. Among these, 11 times a recession occurred within two years. However, Economist Hatzius explained that in 8 of the 11 recessions, the Fed's tightening policy was the cause, and recently, cases of successful soft landings rather than recessions have been increasing.

On the other hand, Economist Hatzius predicted that the normalization of labor supply and durable goods prices during the COVID-19 recovery phase could help the Fed avoid a recession. He added that Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, and the United Kingdom have succeeded in achieving a soft landing.

Bloomberg's own survey conducted in early April also showed that economists estimated the probability of a U.S. recession at 27.5%. In the survey conducted one month earlier, the recession probability was 20%.

This content was produced with the assistance of AI translation services.