The company said in a note published Friday that sees 1.1% GDP growth next yeardown from its previous forecast of a 1.5% expansion from the fourth quarter of 2022 to the end of 2023. In addition, it projects that the unemployment rate will stand at 3.7% at the end of the yearcompared to 3.6% previously projected, and will increase to 4.1% by the end of 2023compared to the previous 3.8%.
the financial firm expects the Fed to raise interest rates by 75 basis points at its meeting next week, up from 50 basis points previously, and sees 50 basis point hikes in November and December, with Fed benchmark interest rates peaking at 4-4.25% in late of year.
“This path of higher rates, combined with the recent tightening of financial conditions, implies somewhat worse prospects for growth and employment next year,” Goldman wrote.
A similar comment was expressed by the directors of the European Central Bankwho expressed concern that interest rates were entering “tight territory.”
This week the markets reacted to the cut in projections of demand or activity that could lead to a scenario of freezing global economic activity: this Friday the shares of the logistics giant FedEx collapsed more than 20% before the company’s report that projected a drop in consumer demand, an indicator of the slowdown of the activity. Something similar happened with the projections of fuel demand by the International Energy Agency, which predicts that for the fourth quarter the demand for fuel will fall due to the drop in activity, mainly due to the slowdown in China due to restrictions due to Covid-19. Oil and Wall Street also collapsed due to these expectations
The Fed will define its interest rate update on September 21.
Source: Ambito
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