As inflation appears to be reducing a little, markets are “calming down”: Exec. of Goldman Sachs

There is a “high possibility” that the US will have a recession in 2019, according to managing director and head of Goldman Sachs Personal Financial Management Joe Duran.

Speaking on “Varney and Co.,” he added that markets have been “calming down” after months of turmoil since inflation appears to be slowing down a little.

Inflation increased more quickly than anticipated to a record four-decade high in June, according to data released by the Labor Department last month, as the cost of basic needs remained exorbitantly high.

According to the agency, the consumer price index—a comprehensive gauge that includes prices for things like food, gas, and rent—rose 9.1 percent in June from a year earlier. Prices increased 1.3 percent in the month following May. Both of those numbers exceeded the 8.8 percent headline figure and 1 percent monthly rise expected by Refinitiv economists by a wide margin.


Since December 1981, the inflation rate was at its highest according to the data.

Energy costs increased 7.5 percent from the previous month and 41.6 percent from a year ago in June, as price rises continued to be seen across the board. The average price of gasoline has increased by 59.9% over the past year and by 11.2 percent since May.

Despite the recent rises, the Goldman Sachs executive told host Stuart Varney that “the inflation picture” is improving. He acknowledged that it had “been a pretty turbulent year so far,” but expressed the hope that people are now “a bit more optimistic.”

According to Duran, only 6% of the time do both equities and bonds decline during a six-month period, making the events that occurred in the markets at the beginning of the year “extremely uncommon.”

Therefore, he said, “Traditional balanced portfolios had a considerably difficult start.”

I:DJI DOW JONES AVERAGES 32749.46 -63.04 -0.19 percent Ticker Security Most Recent Change Percentage Sandamp;P 500 SP500 4153.81 1.36 0.03 percent NASDAQ Composite Index: I:COMP 12714.734961 46.58 0.37% During the first half of the year, markets were volatile as investors digested economic data and priced in several rate increases by the Federal Reserve as the central bank attempts to stop persistent inflation.

Duran highlighted on Thursday that, normally, “it takes roughly 30 months before there is a recession from the moment the Fed starts rising rates.”
He continued, “That only occurs 60% of the time; 40% of the time there is no recession.

The U.S. economy has endured two consecutive quarters of negative GDP, which is the precise definition of a recession, but according to Duran, “there is enough strength” given that unemployment is “still pretty low” and is predicted to “continue to be really strong.”

The day before the July employment data would be announced, the executive offered his views.

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According to economists surveyed by The Wall Street Journal, the number of jobs added in the U.S. economy in July will be 250,000, down from 372,000 in June.

Duran said to Varney on Thursday, “And so I think it takes a long before the additional rate hikes kick in.”

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