Things that make you go hmmm…US crude oil inventory quite bearish, home builders dropping prices, falling demand for residential mortgages … except subprime

Goldman Sachs believes the US economy will slow to a crawl next year

  • Goldman predicts 2.5 percent and 2.2 percent growth in the first two quarters of 2019, respectively, but then just 1.8 percent and 1.6 percent real GDP growth in the final two quarters.
  • “We expect tighter financial conditions and a fading fiscal stimulus to be the key drivers of the deceleration,” wrote the bank’s chief economist, Jan Hatzius.
  • But Goldman believes the U.S. will skirt a recession next year.

Goldman Sachs believes the U.S. economy will slow significantly in the second half of next year as the Federal Reserve continues to raise interest rates and the effects of the tax cut fade.

“Growth is likely to slow significantly next year, from a recent pace of 3.5 percent-plus to roughly our 1.75 percent estimate of potential by end-2019,” wrote Jan Hatzius, chief economist for the investment bank, in a note to clients on Sunday. “We expect tighter financial conditions and a fading fiscal stimulus to be the key drivers of the deceleration.”

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