(Finance) – Policymakers should interpret individual macroeconomic data coming out with some caution, but the current picture indicates that the US economy “is undergoing a healthy deceleration, not a recession”. He states it Goldman Sachsadding that most of the indicators the National Bureau of Economic Research uses to determine if the economy is in recession still suggest that economic activity is booming.
In a new report on the issue, investment bank analysts recall that officials from the FED they signaled the desire to slow down the pace of tightening during the July meeting, in part to reduce the risk of inadvertently restricting activity too much and pushing the economy into a recession.
They point out that the full impact of rate hikes is felt with a delay, economic data is released with a further delay, and the economy sometimes slows too abruptly at the onset of recessions for policy makers to accurately track current conditions. “A particular concern is that real-time economic data may underestimate the rate at which activity is slowing at the start of a recession“, says Goldman Sachs, who has analyzed the past to look for traces of these phenomena.
“We believe the Initial estimates of wages, household employment and consumption growth at the start of the recession tend to be revised downwards While the revisions to payrolls and household employment growth are small, equivalent to about -30,000 jobs per month, the average revision of the three-month annualized real PCE growth is broader, about -1 percentage point per month. We find that GDP growth and industrial production are not significantly revised on average. “