Tags: Goldman | Sachs | Recession | economy

Goldman Sachs: Chances of a Recession Are Soaring

Monday, 03 Oct 2011 08:01 AM

The chances of the United States falling back into a recession are high and getting even higher, according to Goldman Sachs analyst Zach Pandl.

Any recession would be shallow but painful, bringing unemployment rates up to 12 percent from their current levels of around 9 percent.

"Our base-case forecast continues to be that the US economy will avoid a recession, though the risks are high and rising," Pandl writes, according to CNBC.

"While we do not think limited policy options would mean a deeper recession, they would likely imply a more tepid rebound. Whatever the outcome, a U.S. recession today would be painful."

The recession would not be deep because the economy has not bounced back strongly from the most recent downturn and therefore, has less distance to fall.

The banking system is in better shape than in 2008 to weather another downturn, although sentiments that fiscal and monetary authorities are out of bullets to kick-start a recovery could exacerbate a double-dip downturn.

"Constraints on policy — a focus on deficit reduction in Congress and maybe a perception that monetary policy has reached its limits — are a potential negative," Pandl writes.

"While we do not think limited policy options would mean a deeper recession, they would likely imply a more tepid rebound."

Other economists are more pessimistic, arguing a new recession has already begun or is just around the corner.

"It's either just begun, or it's right in front of us," says Lakshman Achuthan, managing director of the Economic Cycle Research Institute, CNNMoney reports.

"But at this point that's a detail. The critical news is there's no turning back. We are going to have a new recession."

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The chances of the United States falling back into a recession are high and getting even higher, according to Goldman Sachs analyst Zach Pandl. Any recession would be shallow but painful, bringing unemployment rates up to 12 percent from their current levels of around 9...
Goldman,Sachs,Recession,economy
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2011-01-03
Monday, 03 Oct 2011 08:01 AM
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