Goldman Sachs Chief Economist: Market Forecasts for U.S. GDP Are Overly Optimistic
Jinse Finance reported that Goldman Sachs has warned that market estimates for US GDP may be overly optimistic, as the data vacuum during the government shutdown could ultimately cause employment data to drag down the previously optimistic outlook. Goldman Sachs' chief economist Jan Hatzius emphasized that during the government shutdown, US GDP estimates rose sharply, with the second quarter expected at 3.8% and the third quarter at 3.3%. According to some estimates, the figure is even higher: for example, the Atlanta Fed wrote in its October 17 update that third-quarter GDP could be as high as 3.9%. Despite the continued rise in the stock market, the market generally expects the Federal Reserve to cut interest rates at least once more before the end of the year. With the growth trajectory seemingly positive, does Wall Street have sufficient reason to celebrate? Hatzius believes, "Not exactly." He warns that employment issues could become a "thorn in the side" of this optimistic outlook, compounded by changes in business behavior as companies respond to policy shifts from the White House. Therefore, Hatzius added, "Since labor market indicators usually provide more reliable information about current economic growth than preliminary GDP estimates, this weakness further strengthens our conviction that the GDP signals for the second and third quarters are overly positive."
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