Goldman Sachs cuts U.S. growth forecast as commodity prices bite
What is it?
As the first quarter of the year comes to an end, many analysts are becoming more pessimistic than at the beginning of 2022.
“Goldman Sachs analysts downgraded their forecasts for U.S. economic growth for this year, reckoning that spikes in oil and other commodities since Russia’s invasion of Ukraine will hurt spending.”*
It will be interesting to see how commodity prices affect the markets in the next quarter. If prices remain elevated then it could have negative consequences for individuals and corporations.
Why does it matter?
This could just be the start of downgraded projections. More pessimistic projections coupled with tightening economic policies could send certain markets lower. If commodity prices stay high, then individuals may have less money to spend elsewhere. For corporations, the rising cost of commodities may begin to lower expected earnings. Stock prices could fall as a result of those lower expected earnings.
“Goldman analysts, led by Jan Hatzius, said there are additional downside risks if shortages of key metals constrain U.S. production, and put the chance of a recession during the next year at 20%-35%.”*
While one downgraded projection is not a need for worry if the trend continues then investors may become more fearful of a greater decline. We will continue to analyze various factors of the macroeconomy to gauge how the economy is changing. This will be represented in the changes to come in our clients’ respective portfolios.
Other articles we found interesting this week:
Russia seeks to destabilize Balkans, warns German foreign minister
Chinese Boeing jet crashes in mountains with 132 on board, no sign of survivors
Russian Stock Trading to Resume After Record Market Shutdown
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Sources:
*Tom Westbrook and Tom Hogue. “Goldman Sachs cuts U.S. growth forecast as commodity prices bite”. Reuters. https://www.reuters.com/world/us/goldman-sachs-cuts-us-growth-forecast-commodity-prices-bite-2022-03-11/
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