This is not good news for the failing Obama/Biden economy. Goldman Sachs is so pessimistic about the economy that it is increasing the odds that the US will go into a recession this year.
The economy took a major blow over the weekend when the Biden Administration announced that it would protect all assets in failed Silicon Valley Bank and Signature Bank. This action confused Americans because the FDIC promises to insure individual accounts up to $250,000. Biden is protecting all accounts and this action brings more uncertainty to the markets.
In addition real wages have decreased for working Americans for the 32nd month in a row.
This is why Yahoo reported this morning:
Goldman Sachs (GS) continues to lead the charge in sounding the economic alarm bells as a fresh banking crisis rolls through markets and the economy.
The investment bank’s chief economist, Jan Hatzius, said Thursday he now sees a 35% chance of a U.S. recession in the next 12-months, up from 25% previously. The increase in odds reflects “increased near-term uncertainty” around the economic effects of small bank stress.
A day earlier, Hatzius cut his 2023 GDP forecast by 0.3 percentage points to 1.2% in a new note out Wednesday afternoon.
The closely watched economist stands alone on Wall Street at the moment in revising forecasts down for GDP, while also raising the odds of a recession amid the banking turmoil.
Recent news flow underscores why Hatzius is trying to get out in front of the potential economic downshift.
Silicon Valley Bank’s (SIVB) collapse last Friday marked the second-largest bank failure in the U.S., behind only Washington Mutual during the Great Recession. Signature Bank’s (SBNY) demise was the third-largest bank failure in history.