Posted on 11/12/2021 12:58:35 PM PST by MNJohnnie
Goldman Sachs warned that soaring inflation is a more significant threat to the global economy than the COVID-19 pandemic, adding fresh pressure to the Biden administration and the Federal Reserve to take action.
The investment banking giant said (pdf) on Nov. 8 that the Federal Reserve will have to start raising interest rates, coming as the Department of Labor reported this week that the year-over-year inflation for consumer prices reached 6.2 percent in October, or the highest rate of rising prices in about 30 years.
Due to medical advancements slowing the spread of COVID-19, Goldman said it expects a reduction in consumer fear over the virus. As a result, rising inflation could replace COVID-19 as the primary issue with broader U.S. economic recovery.
“This means that the biggest risk to the global economy may no longer be a renewed downturn because of fresh virus outbreaks, but may now be higher inflation because of tight goods supplies and excessive wage pressure,” said the firm.
It continued to say that analysts expect some of the supply chain crunch to ease over the next year, “at present the stress on supply chains is substantial and inventories in semiconductors, durable goods, and energy markets are very low.”
Even “a moderate production outage resulting from COVID outbreaks in China, an energy demand spike related to a cold winter, or other short-term disruptions could have sizable economic effects,” Goldman warned.
The Department of Labor’s consumer price index report, released Nov. 10, noted that fuel prices have spiked 59 percent since October 2020, whereas overall energy prices have risen 30 percent for the 12-month period. Food prices also rose about 5.3 percent year-over-year, with meat, poultry, fish, and eggs collectively seeing an 11.9 percent increase from the previous October.
“The monthly all items seasonally adjusted increase was broad-based, with increases in the indexes for energy, shelter, food, used cars and trucks, and new vehicles among the larger contributors,” said the agency, adding that the “gasoline index increased 6.1 percent” in just a month.
The increase in price levels is already proving to be politically perilous for President Joe Biden, who has attempted to link U.S. economic recovery with his Build Back Better agenda that includes a $1 trillion infrastructure bill and a larger, $1.75 trillion social spending measure that’s still being debated in Congress.
In a statement released by the White House this week, Biden provided little detail on how his administration would address the burgeoning inflation crisis, which some analysts have claimed may mirror the 1970s “stagflation” era when the United States and other developed economies saw rapid inflation and high unemployment rates.
Again calling for Congress to pass his agenda items, Biden said he is directing the National Economic Council to focus on reducing energy costs for American consumers. Biden also asked the Federal Trade Commission to deal with “market manipulation or price gouging in this sector.”
covid kills 0.02% of those infected unless one took the shot of non-vaccines
I can’t hear the name “Goldman Sachs” without wanting to vomit.
COVID-19 was never a threat to the economy.
Out of control government has used it as a pretext for throttling economic liberty (along with personal liberty) and it is government which has damaged the economy.
The Chinese Real Estate market is valued at 12 times the total economy of China. The US Real Estate market is valued at 1.2 times the total economy of the USA.
China is going to crash like a meteor and the dinosaurs will become extinct.
Libtards now larger threat than Covid.
Thanks for the news flash 🤪
Next up, Inflation Masks and Vaccines!
What about glowbull warming?
It can’t be worse than glowbull warming.
What did they think was going to happen if they kept interest rates down forever? And as well as the Fed, I blame Bush, Obama, Trump, and Biden. They all put their short term interests over the good of the nation.
How do you change the weather with money ? LOL
That’s an astounding statistic. Can you identify the source? Thanks.
And Goldman Sachs alumni in the Federal Reserve (for the last 30 years), and the Joebama Administration are mostly responsible for the policies that are causing this inflation.
Just examine under his hat.
Printing money while killing production. Works like a charm.
I have been reading the Chinese economy crashing for 20 years. They only get more powerful every year
Well according to the Leftists if all the rich people 9(meaning you) just give a whole lot more to poor people (meaning them) the weather will magically fix itself and be perfect all the time.
the only threat has always been LIBTARDS
A Democratic “blue wave” in November could unleash the fiscal floodgates and fuel the amount of stimulus flowing from Washington, Goldman Sachs told its clients on Monday.The bank’s chief economist, Jan Hatzius, wrote in a note that a large Democratic Senate majority could coordinate more Covid-19 relief, infrastructure spending and new minimum wage legislation.
A “congressional Democratic majority would likely result in substantially more fiscal support. We expect that spending would increase the most under a Democratic sweep of the House, Senate and White House,” Hatzius wrote.
“This would likely include a stimulus package in Q1, followed by infrastructure and climate legislation,” he added. “In this scenario, we would expect legislation expanding health and other benefits, financed by tax increases, to pass” by the third quarter of 2021.
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Goldman Sachs also reiterated its finding that the boost to U.S. economic growth from fiscal stimulus favored by the Biden campaign would “outweigh the negative effects of tax increases, particularly in light of the fact that the increased tax revenue would go to funding new spending.”
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Though gauging the total economic boost from spending programs can be tricky, Hatzius has said that a “blue wave” would force Goldman Sachs to upgrade its near-term forecasts.He wrote earlier in October that a Democratic sweep would virtually guarantee another Covid package and result in an increase in GDP of 2 to 3 percentage points based solely on that stimulus. The firm sees a 3.5% decline in GDP in 2020 and a 5.8% annualized increase in full year 2021.
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