Goldman Sachs has issued a warning about the possibility of a US recession in the next 12 months, citing the recent collapse of three US banks, the troubles at Credit Suisse, and a slump in shares for the ‘big four’ US banks.
The investment bank’s chief economist, Jan Hatzius, predicts a 35% chance of a recession, up from his previous prediction of 25%.
The crisis has hit the ‘big four’ banks hard, with shares in JP Morgan, Bank of America, Wells Fargo, and Citigroup all slumping.
In contrast, shares in Credit Suisse rose by 35% following a $54 billion bailout from Switzerland’s central bank.
While this has helped the beleaguered bank, its shares are still down compared to earlier in the week, before the crisis that engulfed Silicon Valley Bank and subsequently Silvergate Corporation and Signature Bank.
The collapse of Silicon Valley Bank was the second-largest in US history, after the 2008 collapse of Washington Mutual Bank.
While Hatzius is currently the only Wall Street economist to raise the possibility of a recession, Goldman Sachs is renowned for its ability to spot economic trends.
Hatzius has also slashed the US economic outlook and predicts a drop in GDP for the coming quarter.
»Big Four US Banks Slump as Goldman Sachs Predicts 35% Chance of Recession«
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