American’s economy is still looking bleak and signs pointing to a possible recession are continuing to emerge. In a note sent to clients this week, Goldman Sachs’ chief economist said the bank envisions the “odds of a recession as roughly 15% in the next 12 months and 35% within the next 24 months.” Furthermore, the renowned financial expert John Mauldin details that he would not be surprised if the stock market crashed by 40%, as he believes a recession is likely due this year.
Goldman Prediction: ‘Odds of a Recession Roughly 15% in the Next Year, 35% Within the Next 24 Months’
As supply chains become more restricted, and prices rise in the face of wars elsewhere in Europe, significant pressures are being placed on America’s economy. Just recently, Bitcoin.com News reported on last month’s consumer price index data that had shown America’s inflation rate increased sharply to 8.5% in March.
Our news desk explained that Michael Burry is a manager of hedge funds and believes the U.S. Federal Reserve doesn’t intend to combat inflation. Robert Kiyosaki is a famous author who believes hyperinflation as well as depression are here.
In a note sent to investors this week, Goldman Sachs’ chief economist Jan Hatzius detailed Goldman’s forecast and the probability of the U.S. falling into a recession. Hatzius said the Federal Reserve faces a “hard path to a soft landing” and Goldman expects the chances of a U.S. recession to be 35% over the next two years.
“Our analysis of historical G10 episodes suggests that although strong economic momentum limits the risk in the near-term, the policy tightening we expect raises the odds of recession. As a result, we now see the odds of a recession as roughly 15% in the next 12 months and 35% within the next 24 months,” Hatzius explained.
Hatzius explained that history has shown the economy can get very unstable. According to Hatzius, 11 of the 14 cycles that have followed World War II resulted in a recession over a period of 24 months. “Taken at face value, these historical patterns suggest the Fed faces a narrow path to a soft landing as it aims to close the jobs-workers gap and bring inflation back towards its 2% target,” Hatzius added.
Bridgewater Associates Founder Ray Dalio Expects a ‘Period of Stagflation’
Goldman’s chief economist is one of many predicting a downturn in the U.S. economy in the coming months. Over the last few months, a great number of financial analysts and economists have been attempting to predict the U.S. economy’s future.
Ray Dalio of Bridgewater Associates, founder and co-chief executive for investment, stated in an interview that Yahoo Finance published April 4th, that he envisages a world without stagflation. Dalio remarked:
You have enough Federal Reserve tightening to address inflation properly, which is not sufficient tightening of the market and economy. Inflation will continue to rise and this is likely to cause the Fed to find itself in an extremely difficult position within a year. It also means that the Fed’s financial stability and ability to manage the economy and markets will suffer. I think that most likely what we’re going to have is a period of stagflation. And then you have to understand how to build a portfolio that’s balanced for that kind of environment.
Best-Selling Author and Financial Expert John Mauldin: ‘My Instinct Tells Me This Will Not Be a 12-Month Wait’
John Mauldin, a well-known financial expert and forecaster of economic decline is also predicting one. He recently stated that he wouldn’t be surprised to see the stock market crash by 40 percent. “[Fed chair Jerome] Powell and his crew hope to engineer the fabled ‘soft landing,’” Mauldin opined. “I really doubt they can do it,” he added.
Mauldin commented on the fact that the 2-year Treasury yield has recently exceeded the 10-year Treasury yield. This was despite the inverted yield curve. “That’s the opposite of normal. Then again, a bunch of things have been the opposite of normal lately,” Mauldin said. Mauldin is a financial analyst who has been known to predict the U.S. recessions of 2000 and 2008. He believes that the signs are the same. “We have many indications recession is near,” the blog post written by Mauldin notes. The financial analyst’s blog post concludes by stating:
It is impossible to predict exactly when recessions will begin. I know this won’t be a 12 month wait. I think things just continue to slow down and one day we’ll look up and see a recession. And then a little bit later we’ll be growing again. That’s how these things work.
Are you concerned about possible economic recessions in the United States of America? Are you expecting an economic recession in the near-term? Comment below to let us know your thoughts on this topic.
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