- Goldman Sachs has become the second Wall Street bank this week to declare that the US economy is headed for recession this year. The bank's chief US economist, Jan Hatzius, argues that the latest economic data shows recession has now arrived in the world's biggest economy - or will shortly.
- Hatzius, whose warning comes a day after economists at Merrill Lynch issued a US recession alert, added that the Federal Reserve will now cut interest rates from the current 4.25pc to as low as 2.5pc by the end of this year.
- In a research note distributed to the bank's clients, Mr Hatzius real gross domestic product would contract by 1pc on an annualised basis in both the second and third quarters.
- His comments echo those of Merrill Lynch's chief North American economist, David Rosenberg, who rarlier this week said that a weakening employment picture and declining retail sales signal the economy has tipped into its first month of recession.
- Additionally, Goldman believes the domestic unemployment rate will increase to 6.5% next year, up from the 5% the Labor Department reported last week.
Hmm higher unemployment, Fed slashing rates 3% or lower, US heading to recession... sounds vaguely familiar....can't place exactly where I have been reading such thoughts.... hmm, some random blog back in August I believe [Et tu, September?].... exact url.... hard to recall...
Well, I am not part of the "smartest guys in the room" crowd, but I'll claim the smartest blogger in my own room distinction. Not your room. But at least my room, where I am the only one sitting. Welcome aboard the recession train Goldman! Pull up a chair, you're about half a year late.... This is sort of like downgrading the banking sector 2 weeks ago. Gee thanks for the heads up.
