Goldman Sachs: Inflation in the US Will Worsen

inflation goldman sachs

Goldman Sachs, one of the leading global investment firms, recently voiced their analysis on the upcoming financial state of 2022 to their clients, and it didn’t sound too promising.

In fact, when it comes to pandemic-induced disruptions in the global supply chain, they believe it will get worse before it gets better.

The same goes for inflation as well.

In 2021, Americans felt the impact of their money losing its value as inflation rates soared to 6.8%.

The highest levels we’ve seen in over three decades.

To think that every dollar we own is losing at least” 6.8% of its value is disheartening on its own, but then when you hear experts say it will get worse…

On a positive note, the Goldman Sachs economists do believe that there is hope in sight, stating:

“We do not think that aggregate demand is on an unsustainable trajectory or that inflation expectations have become unanchored, and the overshoot should therefore ultimately prove transitory.”

Fed Chairman Jerome Powell himself was the one who created the narrative of inflation being transitory at the beginning of the pandemic.

Analysts have been vocal on the bad judgment call saying that:

“The characterization of inflation as transitory is probably the worst inflation call in the history of the Federal Reserve, and it results in a high probability of a policy mistake.”

 Now, the Fed is backtracking on its word and Powell has noted, “it’s probably a good time to retire that word (transitory).”

Projecting that inflation will indeed worsen considers a few things: that the cost of goods will most likely increase across the board, and two, that the markets may have an adverse reaction.

While no one can promise whether either will happen and just how worse things may get, they are still possibilities that one should prepare for regardless.

Keep in mind that traditionally, the Fed considers a 2% inflation rate to be healthy.

The sentiment from various financial experts could serve as a warning. Extremely overvalued stocks and fears of a stock-market bubble burst are lingering.

We wonder not just how much worse can things get, but how much worse can we handle?

In like times where we face economic uncertainty, one of the best possible actions is remaining proactive.

Creating strategies for various market outcomes could be the difference between retiring on time versus having to work into retirement.

If you need help creating a plan, call American Hartford Gold at 800-462-0071; we can help.

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