Goldman Predicts Recession

Wall Street's top firm sees two unhappy quarters ahead
By Kevin Spak,  Newser Staff
Posted Jan 10, 2008 12:31 PM CST
The building on Broad Street in New York's Financial District that houses brokerage firm Goldman Sachs is shown in this June 12, 2007 file photo. The nation's big investment banks and brokerages are on...   (Associated Press)
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(Newser) – Goldman Sachs is predicting that the economy will slide into a recession this year—which has Wall Street worried, because Goldman’s been right about everything else. The investment firm forecasts a mild pullback extending over two quarters, driving up already-growing unemployment. “If we don't get job growth we don't get income growth, we don't get consumer spending, and we do get a recession,” another firm’s economist told NPR.

While some economists disagree with Goldman, basically everyone believes things are bad enough to merit yet another Federal Reserve rate cut. In a Reuters poll, 20 economists predicted a cut of some size, as recession fear outstrips inflation worries. “I think that battle is still on,” one economist said, “but the recent weak economic data has probably tipped the scales.”