Goldman Sachs reportedly believes the U.S. economy will slow to a crawl next year.
"We expect tighter financial conditions and a fading fiscal stimulus to be the key drivers of the deceleration," Goldman chief economist Jan Hatzius was quoted by CNBC as writing.
"Growth is likely to slow significantly next year, from a recent pace of 3.5 percent-plus to roughly our 1.75 percent estimate of potential by end-2019," Hatzius wrote, according to CNBC.
"With a large overshoot of its labor market target under way, the FOMC will likely be reluctant to stop until it is confident that the unemployment rate is no longer on a downward trajectory, a point we expect to reach only in early 2020," the note said.
However, Goldman believes the U.S. will avoid a recession next year.
"For now, neither overheating risks nor financial imbalances — the classic causes of US recessions — look worrisome," Hatzius wrote. "As a result, the expansion is on course to become the longest in US history next year, and even in subsequent years recession is not our base case."
Other experts aren't quite as pessimistic about the economy's future.
Reuters recently reported that President Donald Trump may just escape having to grapple with a recession before the U.S. Presidential elections in 2020, with investors saying it is unlikely one will occur before then.
Trump has praised the U.S. economy, which grew at 3.5 percent in the third quarter, following a tax-cut-fueled 4.2 percent gain in the second quarter. And even though economists see increased risks for a recession as the Federal Reserve raises interest rates and a trade war with China threatens the economy, such a scenario is still a few years off, Reuters reported.
“We don’t expect another recession until 2021, at the earliest,” Byron Wien, vice chairman of Blackstone Group’s (BX.N) Private Wealth Solutions Group told the recent Reuters Global Investment 2019 Outlook Summit in New York.
Richard Bernstein, Chief Executive of Richard Bernstein Advisors LLC and former Merrill Lynch & Co chief investment strategist, said he did not expect a recession or bear market before the election. “I really don’t think there is a bear market on the horizon. I don’t see anything that changes that.”
However, some investors were less sanguine, saying a recession could still occur in 2020 but that would likely be the earliest.
“It isn’t inevitable we will get it in 2020, and if we see it in 2020 it will probably be made in (Washington) DC,” said Joachim Fels, a managing director and global economic advisor at Pacific Investment Management Co.
JPMorgan Chase's retail chief predicts that worry over an impending U.S. recession might actually cause one.
"This late-cycle recession has the potential to become a self-fulfilling prophecy," JPMorgan Chase Co-President Gordon Smith said during a financial conference held in New York, CNBC.com reported.
"There is a great deal of volatility in the equity markets, a great deal of conversation around how late we are in the cycle and worry about the cycle," Smith said.
"That will ultimately lead to business confidence deteriorating, it will ultimately lead to [corporate] reductions in spending, that will ultimately lead to a shorter work week for hourly-paid people, which will ultimately lead to unemployment beginning to rise, and we would've developed our own recession," Smith said.
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