Goldman Sachs Predicts Return to Pre-2008 Economic and Investment Conditions
Goldman Sachs has stated that the economy and investing landscape appear to be reverting to a pre-2008 environment. This prediction comes as strategists at the firm report that the global economy has exceeded expectations in 2023, and they expect disinflation to continue.
The bank has estimated a 15% recession probability for the upcoming year. Additionally, they anticipate a number of positive factors supporting global growth and investment. They believe that the macro landscape is returning to pre-2008 conditions.
In a recent note titled “The Hard Part Is Over,” Goldman strategists led by Jan Hatzius emphasized that economies around the world have surpassed even the most optimistic expectations for 2023.
According to Hatzius, “2024 should cement the notion that the global economy has escaped the post-GFC environment,” referring to the period after the Great Financial Crisis. Goldman’s forecast suggests that 2024 will mark a significant departure from the low inflation, zero policy rates, and negative real yields that characterized the post-crisis era.
The bank’s strategists note that policymakers have shifted away from the easy-money era, causing significant volatility in the stock market, a rapid tightening of financial conditions, and an increase in the number of “zombie” corporations going bankrupt.
Goldman also expects that returns in rates, credit, equities, and commodities will exceed cash in 2024. This “Great Escape” from the easy-money era has created an investing environment that looks more normal than it has for years.
However, Goldman’s strategists caution that there are “higher-than-normal risks” for 2024, including the possibility of the Fed and other central banks keeping interest rates higher for longer than expected. They also warn of potential downside risks around global manufacturing, particularly if high rates compel companies to normalize inventory levels, potentially delaying a recovery.
Despite these potential risks, Goldman Sachs remains relatively optimistic about the global economy and investing landscape for the coming year.
I have over 10 years of experience in the cryptocurrency industry and I have been on the list of the top authors on LinkedIn for the past 5 years. I have a wealth of knowledge to share with my readers, and my goal is to help them navigate the ever-changing world of cryptocurrencies.
