Former Goldman Sachs CEO advises everyone to prepare for US Recession as inflation spirals out of control. The now Senior Chairman of the firm, Lloyd Blankfein, made this comment and stressed the high risk of the entire situation. This shows that the next few years could be a challenging economic period for the US and subsequently the entire world. We could even argue that the recession is already here.
Lloyd Blankfein on the US Recession
It is essential for both companies and customers to be prepared for the US Recession, stressed Lloyd Blankfein. He was interviewed by CBS News recently, where the Senior Chairman and former CEO of Goldman Sachs were asked whether we are headed towards recession. While he replied that we are definitely moving in that direction, it is not 100%. There is “a narrow path” that can help us avoid it.
Lloyd was also asked whether he thinks the Federal Reserve is responding well to inflation; he thinks that yes, they are. There is too much demand which means the prices go up. The Feds need to curb this demand said, Blankfein. Slowing down the economy and raising the interest rates are the two things that can help them get things under control.
Blankfein also said that he thinks some parts of the inflation and supply issues are transitory, and some are here to stay. It wouldn’t be wrong to assume that inflation would go down from the current 8-10% in the future. At the same time, with the Russia-Ukraine war over, the supply shortages would also go down.
Recession vs. depression
A recession is a macroeconomic phrase that refers to a significant drop in overall economic activity in a certain geographic area. It had previously been defined as two consecutive quarters of economic contraction, as measured by GDP and monthly indicators such as an increase in unemployment. However, now the NBER currently defines a recession as a severe fall in economic activity that lasts more than a few months and is observable in real GDP, real income, employment, industrial output, and wholesale-retail sales.
On the other hand, depression is a substantial and long-term decline in economic activity. It is typically described in economics as a serious recession that lasts three or more years or results in a 10% decrease in the real gross domestic product (GDP).
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