US economy risks a recession in 2023 – Goldman Sachs

The Goldman Sachs analysts now see the risk that the US enters a recession during the next year due to the Russia-Ukraine war.

Key quotes

“Downgrading our US GDP forecast to reflect higher oil prices and other drags on growth related to the war in Ukraine.”

“Now see the risk that the US enters a recession during the next year.”

“Downgrades forecasts for real GDP growth: +0.5%/+1.5%/+2.5%/+2.5% in 2022Q1-04 vs. +1.0%/+2.5%/+2.5%/+2.0% previously.”

“2022 GDP growth forecast to +2.9% on an annual basis vs. +3.1% previously) and +1.75% on a Q4/Q4 basis vs. +2.0%.”

“Even after these downgrades, we still see risks around our growth forecast as skewed to the downside, particularly if sanctions escalate or if oil prices rise even further, for example, to the $175/bbl price target our commodity strategists see as possible if supply losses reach 4mb/d.”

“Additionally, we have not assumed any growth hit due to metal shortages since—aside from palladium—only a small share of US commodity demand is met by Russian exports.”

“However, if supply chain disruptions lead to challenges in sourcing key metals and other inputs that constrain production (as has already occurred for some European automakers), the negative growth impact could be more substantial.”

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