Europe’s reliance on energy from Russia has jacked up the odds that the region could enter a recession this year as soaring inflation pushes people to cut back spending. The United States is more insulated from the spike in oil and gas prices — but it’s not immune.
What’s happening: Goldman Sachs has downgraded its forecast for US economic growth in 2022. It now sees little to no growth during the first three months of the year.
Goldman’s economists, led by Jan Hatzius, said the chance of a recession in the United States over the next year has risen as high as 35%.
“Rising commodity prices will likely result in a drag on consumer spending, as households — and lower-income households in particular — are forced to spend a larger share of income on food and gas,” they told clients on Thursday.
Real-time data on consumer confidence from Morning Consult and Ipsos “show a clear decline in consumer confidence since Russia invaded” Ukraine, they noted.
It won’t be the only source of stress. Financial conditions have also tightened, which could make it harder for businesses to access cash. Europe’s woes will also hurt American companies with global supply chains and operations.
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