Analysts Slash Economic Growth Forecasts

Analysts Slash Economic Growth Forecasts

almost 4 years ago2 mins

Mentioned in story

Investment banks shared miserable economic growth forecasts this week, and drenched companies are bracing themselves for more storms ahead... 🌧 but first, here’s Jerry with sports!

What does this mean?

Goldman Sachs was among the first to cut its economic forecasts for the US, admitting it now expects growth in the world’s largest economy to stall this quarter – and fall by 5% in the next – as companies and consumers alike cut back on spending. The recovery in growth it’s predicting later this year, meanwhile, will be too little, too late: Goldman thinks the US economy will only grow by 0.4% in 2020.

Daily Brief Image

Morgan Stanley is even more downbeat 😞: it reckons there’ll be a worldwide recession, even as global growth ekes out an estimated 0.9% annual gain (emphasis on the “eek”). That pessimism is likely to be vindicated by Germany’s latest investor survey, which showed investor confidence this month was at its lowest since the 2008 global financial crisis. That dovetails with another of Goldman’s predictions: that Europe’s also headed for a recession this year.

Why should I care?

According to TS Lombard, company profits (as measured by their “earnings per share”) have fallen compared to the previous year whenever annual US economic growth has dipped below 2%. And with debt repayments likely to be missed and unemployment likely to rise, TS Lombard is expecting history to repeat itself: it reckons profits this year could be 14% lower than in 2019 📆

Daily Brief Image

Most analysts believe economic activity will start to pick up again after April, and that greater access to “cheap money” should make growth in the second half of the year significantly higher than the first. Whether that actually happens, of course, depends on several unknowables, including the accessibility of coronavirus treatments, the effectiveness of government actions, and the speed post-pandemic life returns to normal – if at all.

Daily Brief Image
Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG