Goldman Sachs Global Economics Analyst US Likely to Avoid Recession In the past year, US growth has slowed to a below-potential pace of about 1% because of a diminishing reopening boost, declining real disposable income (driven by fiscal normalization and high inflation), and aggressive monetary tightening. In our forecast, growth remains at roughly this pace in 2023. Unlike a year ago, when our forecast for both 2022 and 2023 was below consensus because we expected a negative impact of monetary and especially fiscal tightening, our current 2023 forecast is well above consensus (Exhibit 2). Exhibit 2: Our 2023 US Growth Forecast Is Now Well Above Consensus Percent change, year ago Percent change, year ago 3.0 US 2023 Real GDP Growth Forecasts 3.0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 0.5 GS 0.5 Bloomberg Consensus 0.0 0.0 Jan-2022 Apr-2022 Jul-2022 Oct-2022 Source: Bloomberg, Goldman Sachs Global Investment Research Our disagreement with the consensus is even more visible when we focus on recession probabilities. As shown in Exhibit 3, we estimate a 35% probability that the US economy enters recession over the next 12 months, well below the median of 65% among the forecasters in the latest Wall Street Journal survey and toward the bottom of the range. 16 November 2022 3