🦧 what gs thinks

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now that we’re nearing the end of the year…

2022 was a rough year for the markets and the economy at large to say the least. we had to constantly re-adjust and question our portfolio. today we’ll take a look at goldman sachs' latest external release on its 2023 macro outlook!

the quick summary

• "expect global growth of just 1.8% in 2023"

• “fed hiking another 125bp to a peak of 5-5.25%”

  • no rate cuts expected in ‘23

• us will narrowly miss recession, but euro and uk will probably be in recession

  • real income hit from surging energy bills

  • expect only a mild downturn

  • rate hikes expected through may will a 3% european central bank peak

• cautious because about china because of the long slide in the property market

us likely to avoid recession

the current bloomberg estimate (consensus of top firms) for the probability of a us recession in 2023 is 65%, while goldman’s at 35%

35% because:

• advance gdp report showed 2.6% growth in q3 (annualized), nonfarm payrolls grew 261k in oct., 225k initial jobless claims in the week of nov. 5 – nowhere close to recessionary levels

• financial conditions drag will "likely diminish" if the fed does not deliver dramatically more tightening

this cycle looks different from previous recessionary cycles

• the us labor market overheated post-pandemic, but it wasn't because of excessive employment. it was because of unprecendented job openings that surged in 2020-2021 in recovery mode

• long-term inflation remain "well-anchored", relative to the 70s

remember, this is just one report!

💡 something im thinking about

a great application of ai. wonder how accurate/effective it is! (click image)

that's all, folks 🐒

as always, i’m no financial advisor! (i’m no substitute for professional financial services)