Since September, Google has put a huge $1.5 billion into blockchain companies
Lower cryptocurrency prices have little impact on the US economy, according to Goldman Sachs
Elon Musk predicts that the US economy will be in a recession for the next 18 months
Goldman Prediction: ‘Odds of a Recession Roughly 15% in the Next Year, 35% Within the Next 24 Months’
The US economy is under severe strain as supply chains are constrained and consumer costs skyrocket as a result of the conflict in Europe. Recently, Bitcoin.com News reported on consumer price index data from last month, which indicated that America's inflation rate climbed significantly to 8.5 percent in March.
A few days later, our newsdesk detailed how hedge fund manager Michael Burry believes the Federal Reserve of the United States has no intention of combating inflation. Additionally, renowned author Robert Kiyosaki believes hyperinflation and despair have already occurred.
Goldman Sachs' chief economist Jan Hatzius explained Goldman's prediction and the probability of the United States entering a recession in a note to investors this week. Hatzius stated that the Federal Reserve has a "difficult path to a soft landing," and Goldman forecasts a 35 percent risk of a US recession over the next two years.
"Our study of previous G10 episodes indicates that, while robust economic momentum mitigates risk in the near term, the expected policy tightening increases the likelihood of recession. As a result, we now estimate the likelihood of a recession at approximately 15% in the next 12 months and 35% in the next 24 months," Hatzius added.
Hatzius continued by stating that historical trends indicate the economy may face difficulties. He remarked that 11 of the 14 economic cycles after World War II have ended in recessions lasting less than 24 months. "Taken at face value, these historical tendencies suggest that the Fed confronts a tight road to a gentle landing as it seeks to repair the jobs-to-worker gap and restore inflation to its 2% target," Hatzius noted.
Bridgewater Associates Founder Ray Dalio Expects a ‘Period of Stagflation’
Goldman's top economist is one of several economists forecasting a slowdown in the United States' economy in the coming months. Numerous financial analysts and economists have been attempting to forecast the future of the US economy during the previous few months.
Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, stated in an April 4 interview with Yahoo Finance that he expects a stagflationary scenario. Dalio observed:
So what you have is enough tightening by the Federal Reserve to deal with inflation adequately, and that is too much tightening for the markets and the economy. So the Fed is going to be in a very difficult place a year from now as inflation still remains high and it starts to pinch on both the markets and the economy. I think that most likely what we’re going to have is a period of stagflation. And then you have to understand how to build a portfolio that’s balanced for that kind of environment.
Best-Selling Author and Financial Expert John Mauldin: ‘My Instinct Tells Me This Will Not Be a 12-Month Wait’
John Mauldin, a well-known financial analyst, is also forecasting an economic slump, having previously stated that he would not be surprised if the stock market crashed by 40%. "[Fed chairman Jerome] Powell and his team are attempting to arrange the fabled'soft landing,'" Mauldin said. "I have serious doubts they can pull it off," he added.
Mauldin noted that the two-year Treasury rate just exceeded the ten-year Treasury yield, resulting in an inverted yield curve. "That is the antithesis of normal. However, a number of recent events have been diametrically opposed to typical," Mauldin explained. The financial analyst is well-known for correctly forecasting the US recessions of 2000 and 2008, and he believes the tell-tale symptoms are the same this time around. "There are numerous indicators that a recession is imminent," Mauldin writes in a blog post. The financial analyst closes his blog post by stating:
There is absolutely no way to precisely predict when a recession begins. My instinct tells me this will not be a 12-month wait. I think things just continue to slow down and one day we’ll look up and see a recession. And then a little bit later we’ll be growing again. That’s how these things work.
