By Sam Boughedda
Goldman Sachs said on Tuesday that 57% of its clients expect a US recession in 2023, which is slightly more optimistic than consensus expectations.
The company held its Global Strategy Conference for clients in London on Monday, where it surveyed attendees.
The consensus suggests the average probability of a recession is 65%, according to Goldman, who said the “relative bullishness” could be because the market has rebounded so far this year, and there has been some good news recently about the growth-inflation mix .
“Our economists don’t expect a recession in the US. Their probability of a recession is 35%. Part of this disagreement with the consensus stems from our more optimistic view of whether a recession is necessary to contain inflation” , according to Goldman Sachs analysts.
In addition, Goldman Sachs asked clients when they expect the first rate cuts, with 52% saying they expect the first cut in the first half of 2024. Meanwhile, 20% believe the Fed will cut rates this year.
“Our economists think there are two possible reasons for lowering fund rates going forward: 1) if the declines and Fed officials decide that policy no longer needs to be so restrictive; 2) if the economy goes into recession or in danger of disappearing.” therefore without easing of monetary policy,” the analysts said. “Our economists doubt that a commodity-induced fall in inflation they expect in 2023 would be enough to give the FOMC confidence that inflation continues to fall and do not expect the US to slip into recession this year. So, they expect the FOMC to simply leave policy rates unchanged until something goes wrong.”
Elsewhere on Tuesday, BofA analysts told investors that the fund manager’s research shows that “people are still bearish, but a lot less bearish than they were in the fourth quarter.”
They pointed to optimism about China and the Fed as drivers of the less bearish stance, with survey results also suggesting that recession concerns will fade with China’s reopening.