Goldman Sachs forecasts 30 percent chance of US economy tipping into recession


Goldman Sachs said it now thinks that there is a 30% chance of the U.S. economy tipping into a recession over the next year. It is up from its previous forecast of 15%.

Wall Street was set to open higher on Tuesday. Moreover, European shares were set for the second day of gains, recovering slightly from last week’s 17-month lows. However, major central banks’ rate hike plans and global recession risks kept investors cautious.

World stocks have edged higher so far this week, recovering from last week’s sharp sell-off which saw global equities tumble to their lowest since November 2020 as expectations for central bank policy tightening to combat high inflation prompted investors to ditch risky assets.

More about the prediction by Goldman Sachs

Notably, the analysts expect the bounceback to be short-lived. Timothy Graf, head of macro strategy for EMEA at State Street Global Markets, said “the move higher was likely a result of markets being oversold in recent weeks and relief that event risks, such as the Bank of Japan and Swiss National Bank meetings, have passed.”

Oil prices rose as investors focused on tight supplies of crude and fuel products. Brent crude futures were up 1.1% at $115.38. While U.S. West Texas Intermediate (WTI) crude futures were up 1.4% at $111.13. Gold was little changed at around $1,832.6 an ounce. Bitcoin was up around 3% on the day at $21,173, having stabilized slightly since it plunged to as low as $17,592.78 at the weekend. Cryptocurrencies have increasingly become a metric of risk appetite, State Street’s Graf said.