JULY 4, 2022
The Goldman Sachs & Co. logo is displayed at the company’s booth on the floor of the New York Stock Exchange (NYSE) in New York.
The base-case expectation isn’t for a recession in the US, a Goldman Sachs Group Inc. strategist said Monday.
Monetary tightening is likely to continue and there may be a “technical” recession, Gurpreet Gill, a macro strategist of global fixed income at Goldman Sachs Asset Management, told Bloomberg Television. That happens when there are two consecutive quarters of negative growth in real gross domestic product.
“But what really matters when you’re thinking about the investment landscape and opportunities in fixed income sectors is the magnitude and sort of the characteristics of that recession,” she said.
Job growth is expected to level off as central banks raise interest rates, in a effort to tame inflation, Gill added. In June, the US Federal Reserve raised its benchmark interest rate three-quarters of a percentage point to a range of 1.5% to 1.75% — the biggest increase since 1994. The central bank is expected to hike rates again later this month.
“What central banks are trying to engineer is a degree of softening in the labor market,” Gill said. “They want to slow the labor market to the extent that companies shelve new hiring plans but don’t necessarily engage in large-scale layoffs.”
