Bloomberg / Getty
Goldman Sachs Chief Economist Jan Hatzius made this forecast in an interview with the Swiss newspaper Neue Zürcher Zeitung (NZZ).
In his view, the impact of the conflict in the Middle East on the global economy will be limited. If oil prices stabilize around $90 per barrel, the inflationary shock could end within one or two months, although energy prices will remain elevated.
The U.S. retains its advantage
Hatzios believes that the U.S. economy will continue to expand, albeit at a slightly slower pace than expected before the escalation of the situation surrounding Iran. According to him, growth is being supported by large-scale investments in artificial intelligence and fiscal stimulus measures.
At the same time, Goldman Sachs does not expect significant changes in U.S. monetary policy over the next 12 months. Weaker consumption and persistent inflation, according to the bank, will offset each other.
The economist paid particular attention to the impact of artificial intelligence on the labor market and productivity. He estimates that over the next decade, AI could affect about a quarter of all working hours in the U.S., but this does not mean a mass disappearance of jobs.
“I am confident that, in the medium term, job losses will be offset by hiring in new industries and professions,” said Jan Hatzius.
According to Goldman Sachs’ forecast, investment in AI infrastructure—data centers, servers, and semiconductors—will grow from the current level of about 1% of U.S. GDP to approximately 2% of the economy.
Europe faces a productivity problem
The economist is far more cautious in his assessment of Europe’s prospects. According to his forecast, eurozone economic growth will slow from 1.5% to 0.7%.
Hatzis cites low labor productivity growth as the main reason for the lag. After the pandemic, productivity in the U.S. increased by about 2% annually, while in Europe it rose by only 0.5%.
The economist also endorsed the conclusions of a report by former European Central Bank President Mario Draghi on the need to deepen the single market, liberalize structural policies, and create conditions for the emergence of larger European companies.
At the same time, Hatzius does not expect the gap between the U.S. and Europe to widen further. In his view, the spread of artificial intelligence technologies and investment programs in a number of European countries are capable of gradually improving the productivity situation.
The stock market remains expensive but not overheated
Despite the rapid rise in tech stocks, Goldman Sachs’ chief economist sees no signs of an extreme market bubble.
According to him, the price-to-earnings ratio of S&P 500 companies is around 24, which is significantly lower than the levels seen during the dot-com boom of the late 1990s.
Even a possible 20% stock market correction, according to Hatzius’s assessment, would only slightly slow U.S. economic growth and is unlikely to cause a recession on its own.
