Tags: Goldman | Hatzius | Energy | Economy

Goldman’s Hatzius: Energy Dragging Down Economy

Thursday, 08 Mar 2012 08:03 AM

Goldman Sachs Group chief economist Jan Hatzius says energy prices are starting to drag down the economic recovery.

"I think we’re seeing some drag," Hatzius told CNBC. "We would say maybe a quarter to a half point [off gross domestic product] from the increase in oil and gas prices seen since December,” he said.

“There may be a very small offset from the lower natural gas prices, but we still think oil is more important."

Editor's Note: Meltdown on Main Street Coming, Prepare Now

Hatzius says he expects "moderate GDP growth" because the labor market is improving very slowly in addition to oil and gas price increases

"We think there’ll be some fiscal restraint. That’ll be more of a issue for 2013 than for 2012," says Hatzius.

Hatzius still thinks the Federal Reserve “is going to be very easy" with its monetary policy.

"It’s going to keep rates low for a very, very long time and it’s more likely than not they will engage in another round of quantitative easing,” he says. “In a moderate-growth environment I still think they will want to give the recovery an extra push."

Hatzius predicts that this Friday's nonfarm payroll number will show 200,000 jobs were created in February and that the unemployment rate will decrease to 8.2 percent from the current 8.3 percent.

"I would view that as generally encouraging," Hatzius says.

USA Today reports that economists are betting the government's employment report for February will be another reasonably good one, according to a Bloomberg survey showing an average prediction of 204,000 new jobs

Editor's Note: Meltdown on Main Street Coming, Prepare Now

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