According to a prediction by Goldman Sachs analysts, U.S. economic growth will slow between July and September and then begin to decline. They believe the peak is approaching because stimulus spending and economic reopening will soon reach their maximum impact and start to fade. The group is also worried about global economic recovery because COVID infections are rising dramatically in crucial economies like India, which is causing new lockdown measures. While in China, officials indicate that its recovery could be losing steam.
Is the US recovery approaching its peak?
Bolstered by strong data, investors are expressing plenty of faith in the power of the global economic recovery. But what if this spring is as good as it gets?
What’s happening: Goldman Sachs (GS) analysts predict that US economic growth will slow after the April-to-June period this year. Meanwhile, Covid-19 infections are rising dramatically in crucial economies like India, forcing local officials to enact new lockdown measures, while recent figures from China indicate that its recovery could be losing steam.
In a note to clients this week, Goldman Sachs said that the US expansion “is peaking.” The investment bank’s economists predict the country’s economy will grow at a 10.5% annual rate this quarter, its strongest increase since 1978 (outside the unusual third quarter of 2020, when activity boomed after cratering during lockdowns).
The team then expects economic growth to “slow modestly” between July and September and “decline sequentially during the next several quarters.”
“Although our economists expect US GDP growth will remain both above trend and above consensus forecasts through the next few quarters, they believe the pace of growth will peak within the next 1-2 months as the tailwinds from fiscal stimulus and economic reopening reach their maximum impact and then begin to fade,” the strategists wrote.
Read why they say full economic recovery could be delayed, here.
Fox Business/Jonathan Garber
Stocks seek direction as Biden holds climate summit
U.S. stock futures slipped in early trading a day after the major averages got back on track following two days of selling.
Dow Jones Industrial Average futures were down 25 points, or 0.07% while S&P 500 futures and Nasdaq futures were weaker by 0.13% and 0.18%, respectively.
The early selling comes as President Biden holds a virtual conference with 40 world leaders, including Chinese President Xi Jinping, where he will pledge to lower U.S. greenhouse gas emissions by up to 52% from 2005 levels before the end of the decade.
In stocks, automakers were among the groups in focus as Biden gets set to unveil his climate actions.
Meanwhile, Credit Suisse Group said it could raise around $2 billion through the sale of new shares in order to shore up its balance sheet following the Archegos Capital Management debacle, which resulted in a 4.4 billion Swiss franc charge. The bank expects an additional 600 million Swiss franc charge in the current quarter.
Read the full story, here.
Yahoo! Finance/Julia La Roche
Dimon: ‘Guessing at market tops, market bottoms, that is a complete loser’s game’
JPMorgan Chase (JPM) CEO Jamie Dimon says it’s a “loser’s game” to try to time the peaks and troughs of the stock market.
“Investing should be a permanent thing. Save, invest. Save, invest. Guessing at market tops, market bottoms – that is a complete loser’s game. I’ve never seen anyone win at it. The smartest investor in the world, Warren Buffett, would say that is not the way to invest,” Dimon said on a client webcast on Wednesday.
The long-time bank CEO said his advice is to “make investments, be very thoughtful about what you’re doing, think through your retirement needs and all those kinds of things, and everyone needs a little help doing that.”
Dimon, who pointed out that he hates forecasting the stock market, said a “booming economy will justify today’s prices.” The bank CEO said there “are bubbles out there,” but he declined to mention any names.
“I’m not surprised. I’ve never seen anywhere in the world that you don’t have bubbles and stuff like that take place. People speculate, and I don’t know why,” Dimon said, referencing the line from the film Casablanca where Captain Louis Renault says he’s “shocked, shocked, to find that gambling is going on in here.”
Keep reading, here.