Bloomberg Talks
Goldman Sachs Chief Economist Jan Hatzius Talks Inflation
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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Quick takeaways
- Goldman Sachs forecasts only 0.5% growth for the US economy by 2025, while inflation is expected to rise into the mid-3's.
- Political pressure, particularly threats to the Fed chair, is influencing financial markets by tightening conditions and affecting interest rate decisions.
Deep dives
Economic Outlook and Interest Rate Decisions
The economic growth outlook has notably weakened, with predictions indicating barely positive growth by 2025, only 0.5 percent from fourth quarter to fourth quarter. Simultaneously, inflation expectations have also escalated, with core inflation projected to climb back to the mid-threes. As a result, the Federal Reserve is likely to adopt a wait-and-see approach before making any moves regarding interest rate cuts. The decision will depend largely on developments in the labor market and inflation expectations, with potential cuts not anticipated until significant labor market deterioration occurs.
