By Jared Mitovich
The surge in oil and gas prices has increased the probability of a recession in the U.S. economy in the next 12 months to 30%, up 5 percentage points from earlier estimates, according to Goldman Sachs.
The energy price shock-combined with tightening financial conditions due to the Middle East conflict and the fading effects of President Trump's major tax law passed last summer-led Goldman Chief Economist Jan Hatzius to lift his base-case forecast for unemployment to 4.6% by year-end. Goldman still expects the Federal Reserve to cut rates in September and December.
The bank also expects U.S. GDP to grow below trend in the second-half of the year, forecasting an annualized growth rate of between 1.25% and 1.75%.
Goldman earlier Monday raised its oil price forecast for the year due to a prolonged disruption of energy flows through the Strait of Hormuz. The conflict will boost global inflation and subtract 0.4 percentage points from global GDP growth, but its effect on GDP could double or triple in the worst-case scenario, Goldman said.
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(END) Dow Jones Newswires
March 23, 2026 12:03 ET (16:03 GMT)
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