The chance that a slowdown could push the United States into a recession later this year is about 20 to 35 percent, the firm said.

Goldman economists are far from alone. Texas-based Comerica Bank on Thursday lowered its growth outlook to 3.2% for the year from 4%. And Yardeni Research, which sells market analysis to fund managers, adjusted its forecast for real GDP growth from 2.8% this year to 2%.

“Before Putin’s war, the consensus outlook for the economy was that if the Omicron Wave depressed economic activity in January, economic growth was likely to rebound as the pandemic waned,” Ed Yardeni, former economist of the Federal Reserve and seasoned investment strategist who leads the firm, wrote on Friday. “Now we see a more stagflationary outlook with consistently higher inflation and less economic growth.”

A recession, he continued, “can no longer be ruled out.”

The risks posed by the Russian-Ukrainian war are manifold, affecting not only commodity prices and spending, but also consumer confidence and international exports. Goldman estimates that the combination of rising gasoline and food prices alone – which are soaring even as prices overall have already hit a 7.9% annual growth rate in the month last – “will create an effective drag of 0.7 pp on real disposable income in 2022,” the economists said. written by Jan Hatzius.

Data from

Bank of America

suggests that some of these effects could already be felt, especially for low-income households whose pandemic-related savings are shrinking and who are forced to spend a greater share of their income on food and gas. While Bank of America card data showed that households of all incomes increased their spending on gasoline, lower-income consumers reduced their spending on clothing and furniture in return.

Weaker consumer sentiment should also “create an additional drag on consumer spending,” Goldman said. Data from the University of Michigan showed on Friday that the consumer confidence index has fallen nearly 30% over the past year and 5% over the month, reflecting the uncertainty posed by the war. Russian-Ukrainian.

To be sure, some aspects of the U.S. economy remain strong, and continued spending by Americans of excess savings built up over the past two years — in combination with the reopening of the service sector — should keep growth positive in the future. course of the next few months. . The labor market is tight and continues to improve as more Americans, shaking off fears of the coronavirus and benefiting from the reopening of schools, return to work.

This strength, combined with persistent inflation, should keep the Federal Reserve on track for monetary policy tightening this year, even despite the significant uncertainty caused by the war.

“The energy spike is making the Fed’s job harder,” Scott Ruesterholz, portfolio manager at Insight Investment, wrote on Friday, adding that the central bank “is caught between the inflationary and economic pressure presented by rising oil prices. energy”.

But even though inflation looks likely to stay elevated for longer, “we believe the US domestic economy currently appears well positioned to withstand pressure given a healthy buffer of consumer savings and domestic output.”

Write to Megan Cassella at [email protected]