The Federal Reserve is tapping the brakes on U.S. economic growth, which could help bring down inflation and temper the most overheated job market in postwar American history, according to Goldman Sachs Research.
As inflation surges, the U.S. central bank has taken a more hawkish stance this year. That’s part of the reason Goldman Sachs’ Financial Conditions Index has tightened by about 100 basis points since April, which is forecast to be enough to reduce the growth in gross domestic product by about 1 percentage point. Goldman Sachs Research now expects U.S. economic growth of 2.4% this year on an annual basis (versus 2.6% previously) and 1.6% in 2023 (versus 2.2%).
“We now think the rate hikes that are currently priced into financial conditions are in the ballpark of what is ultimately needed to restore balance to the labor market and cool wage and price pressures,” Goldman Sachs…
