Europe Slips Into Recession, U.S. Holding On

Posted on 06/13/2023

The European economy contracted by 0.1% in the first quarter of 2023, with the traditional definition of a recession being met. Rising food and fuel costs have also taken a toll. French pensioners continue to protest in the streets, and the retirement age has just been lifted from 62 to 64. French President Emmanuel Macron signed the unpopular pension reforms into law.

However, the U.S. is “less likely” to enter a recession according to Goldman Sachs. There is only a 25% chance of recession this year, Goldman economists say: “The U.S.’s agreement to raise the nation’s debt limit will result in small spending cuts that are expected to leave the economy’s trajectory unchanged over the next two years.” Disposable income is expected to rise, and housing prices will stabilize, the theory goes.

The question on Goldman’s mind, and everyone else, is “Whether the Fed will have to generate a recession to bring inflation back to its target of 2%.” Goldman Sachs is a contrarian at times. Goldman Sachs’ “Regional Analysis” section could leave a reader optimistic about commercial real estate with a closing quote from an interviewee: “Commercial real estate in North America is a great place to allocate capital over the medium and long-term.”

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