Goldman Sachs is forecasting US inflation (the core PCE inflation rate) falling to a level of low 2s y/y by US spring-time.
More from the note, issued December 26:
Our most out-of-consensus call for 2024 is our growth forecast.
- Our 2% forecast for 2024 Q4/Q4 GDP growth is well above consensus of 0.9% and the FOMC’s 1.4% forecast. This reflects our view that the growth impulses from changes in financial conditions and changes in fiscal policy should be modest and roughly neutral on net next year. It also reflects our forecast that consumer spending will easily beat expectations—we expect 2% growth vs. consensus of 1%—because real income should grow about 3% and household net worth is close to an all-time high.
Consistent with our growth view, we expect the labor market to remain strong.
- The healthy starting point of still-high job openings and a low layoff rate coupled with fading recession fears should support steady job gains in 2024 at a rate that gradually converges over the year to the current breakeven pace of about 100k. This should keep the unemployment rate low at around 3.6%.
The likely FOMC response.