May 16, 2022 03:00 am
Goldman Sachs economists lowered their forecasts for U.S. economic growth this year and the bank’s senior chairman, Lloyd Blankfein, warned companies and consumers to prepare for recession.
Goldman economists, led by Jan Hatzius, said they now expect gross domestic product to grow 2.4% this year, and 1.6% in 2023, down from 2.6% and 2.2% previously.
The Goldman report came on the same day that Blankfein, the former chief executive of the company, said there is “a very, very high risk factor” that the U.S. is headed for a recession as the Federal Reserve tightens policy to tackle high inflation.
“If I were running a big company, I would be very prepared for it. If I was a consumer, I’d be prepared for it,” Blankfein said “Face the Nation.”
However, recession was “not baked in the cake” and there was a “narrow path” to avoid it, Blankfein said, adding that the Fed had “very powerful tools” to fight inflation and had been “responding well.”
Blankfein said that some of the inflation would “go away” as global supply chains recovered and as Covid-19 lockdowns in China were lifted, but “some of these things are a little bit stickier, like energy prices.”