Bloomberg Talks Goldman Sachs Chief Economist Jan Hatzius Talks Inflation
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Apr 22, 2025 
Jan Hatzius, Chief Economist at Goldman Sachs, shares his insights on the US economy's future, predicting barely positive growth in 2025 and inflation rising to the mid-3’s. He highlights how political tensions, particularly Trump's threats against Fed Chair Jerome Powell, are influencing financial markets. Hatzius also discusses the implications of economic pressures like declining real incomes and their effect on consumer behavior and business investments, emphasizing the uncertainty that stifles market confidence.
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US Growth and Inflation Outlook
- Growth outlook for the US has significantly deteriorated with only barely positive growth expected in 2025.
- Inflation is also expected to return to the mid-3% range or higher, complicating Fed policy decisions.
Trump's Threats Tighten Financial Markets
- Talk of President Trump firing Fed Chair Powell has tightened financial conditions, raising bond yields and weakening equities and the dollar.
- This threat has had a significant and negative impact on financial markets.
Fed Should Be Reactive, Not Preemptive
- The Fed should avoid preemptive rate cuts to prevent inflation from hardening into second-round effects.
- They should react to data on labor market deterioration and inflation expectations before deciding on cuts.