A ‘substantial’ economic slowdown awaits us in 2022: Goldman Sachs chief economist

The U.S. economy will be battling a continued slowdown in 2022 as it contends with sticky inflation and supply chain bottlenecks, reasons Goldman Sachs (GS) chief economist Jan Hatzius. 

“I would say growth is clearly slowing. Obviously we are past the peak [growth] rate, but it’s a relatively gradual slowdown,” said Hatzius on Yahoo Finance Live. 

Hatzius and his team made headlines earlier this month for cutting their 2021 GDP growth estimate to 5.6% from 5.7%. The group also issued a somewhat tepid 4% GDP growth projection for 2022, down from 4.4% previously.

For the third quarter, Goldman estimates real U.S. GDP of 3.25%. Consensus estimates are around 3.9% growth.

The very closely followed Wall Street economist acknowledges the economy is still growing solidly right now as consumers spend pent up savings, the pandemic’s grip on mobility begins to ease, and the employment market remains hot. 

These factors were all evident in the significantly better-than-expected September retail sales report, where sales online and at department stores led the way.

But the setup for 2022 is looking rather different based on Goldman’s work. 

Adds Hatzius, “As we go through 2022 though, I think we’ll see more of a substantial slowdown because a lot of these near-term forces probably are not very long-lasting. So the second half of the year I think will be significantly lower.”

Economic growth may not re-accelerate to any noticeable degree until late in 2022 and into 2023, Hatzius explains. But, this is not a stagflationary environment as current populist thinking would lead investors to believe, he said.

“I would say it’s going to feel more like a traditional cyclical deceleration in growth.” 

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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