The American banking holding company Goldman Sachs Group lowered its forecast for U.S. economic growth in 2023 this week. According to experts, the Federal Reserve will continue to tighten monetary policy, which is bound to reduce business activity in the country. Bloomberg reports on this.
GDP is expected to grow by only 1.1% during that period. Previously, Goldman had forecast economic growth of at least 1.5%. The forecast for 2022 remains unchanged at 0%. The bank’s experts believe that the country’s financial regulator will raise the federal funds rate by 75 basis points, which in turn will bring the terminal rate up from 4% to 4.25% by December.
This situation will have a negative impact on employment in the labor market. At the same time, according to the holding company’s experts, the unemployment rate will rise by 0.1% by the end of the year—to 3.7%—and to 4.1% by the end of 2023. The Consumer Price Index in the United States rose by 0.1% in August, although economists had predicted a possible 0.1% decline—the Fed is expected to raise rates by 75 basis points for the third time.