Source: Wall Street See
Goldman Sachs economist Jan Hatzius' team pointed out that the key driver of labor demand is economic activity, and GDP growth has clearly slowed down. The Federal Reserve may cut interest rates once in September and December.
Although the non-farm employment data has not shown a significant cooling, Goldman Sachs believes that the US employment market has reached a turning point and is likely to weaken in the near future.
Goldman Sachs economists such as Jan Hatzius pointed out in a report released on Monday that although the strength of labor demand is not yet clear, in contrast to the healthy non-farm employment data, the number of initial and continued claims for unemployment benefits has risen in recent weeks.
The bank believes that although the dot plot announced by the Federal Reserve last week was biased towards conservatism, predicting a decrease in interest rates from three times to just once this year, it is very likely that there will be two interest rate cuts this year (in September and December) based on the recent release of economic and employment data:
Ultimately, the key driving factor for labor demand is economic activity, and GDP growth has clearly slowed down.
Regarding inflation, Jan Hatzius believes that the rebound in inflation in the first quarter may be an "anomalous phenomenon," and core CPI growth is expected to remain stable for the rest of this year, while core services inflation for housing and non-housing will gradually slow down.
Moreover, Jan Hatzius also believes that US economic growth may continue to slow down:
Real income growth has slowed down, consumer confidence has fallen again, and there are initial signs that the increase in election-related uncertainty may drag down corporate investment in the coming months.
Editor/tolk