Goldman sees slower growth, labor market with two Fed cuts

Goldman sees slower growth, labor market with two Fed cuts
Any further slowing of demand will hit jobs not just openings.
JUN 18, 2024
By  Bloomberg

The US labor market stands at an “inflection point” where any further softness in demand for workers will hit jobs, not just job openings, according to economists at Goldman Sachs Group Inc.

The current strength of labor demand is unclear, with healthy nonfarm payrolls contrasting with rising initial and continuing jobless claims in recent weeks, economists including Jan Hatzius wrote in a note to clients.“Ultimately, the key driver of labor demand is economic activity, and GDP growth has slowed meaningfully,” Hatzius wrote. So despite the Federal Reserve’s “surprisingly hawkish” projections last week, “we feel good about our forecast of two cuts (in September and December).”Fed officials last week dialed back their expectations for interest-rate cuts to just one this year, instead of the three reductions penciled in previously. Goldman as recently as May had been betting the Fed would begin cutting rates in July. Hatzius said the spike in inflation seen in the first quarter was likely an “aberration,” with reports in the remainder of the year set to show flat core goods prices and a gradual deceleration in both shelter and non-housing core service inflation. As for the economic growth outlook, the Goldman economist says most of the recent slowdown is likely here to stay.“Real income growth has softened, consumer sentiment has fallen anew, and there are early signs of an increase in election-related uncertainty that could weigh on business investment in coming months,” Hatzius wrote in the note dated June 17.

Copyright Bloomberg News

Latest News

Five-person Raymond James team jumps to Janney in Maryland
Five-person Raymond James team jumps to Janney in Maryland

The group led by a 37-year industry veteran brings $470 million in assets to the Philadelphia-based broker dealer.

$20B Merit looks to next phase as Constellation takes minority stake
$20B Merit looks to next phase as Constellation takes minority stake

The Atlanta, Georgia-based national wealth firm revealed its new PE partner as prior backers Wealth Partners Capital Group and HGGC’s Aspire Holdings exited their investments.

$350M father-son duo hops from Osaic to Equitable Advisors
$350M father-son duo hops from Osaic to Equitable Advisors

The latest departures in Ohio mark another setback for the hybrid RIA, which is looking to "expanding its presence across all models and segments of the wealth management industry.”

Fresh off HPS acquisition, BlackRock inks deal for $7.3B ElmTree Funds
Fresh off HPS acquisition, BlackRock inks deal for $7.3B ElmTree Funds

The St. Louis-based real estate investment firm gives the asset management giant a valuable access point to the roughly $1 trillion net lease market.

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.