U.S. Economic Crisis: Goldman Sachs Analyst
The Russian invasion of Ukraine had worsened the already detrimental U.S. inflation pressures and economic downturn. Further, the country has not been able to recover from its massive negative outcomes of it. In addition, the power head’s stock market tumbled fairly affecting the financial markets around the world. Another terrible update is that Abby Joseph Cohen, former Goldman Sachs investment strategist, has warned of forthcoming risks that can potentially affect the U.S. economic crisis.
This update is of utmost concern and importance as any change in the power head’s economic performance will have a relative impact on the rest of the world as well. The Goldman Sachs strategist mentioned that the dangers are due in the next five to 10 years if the necessary measures and precautions aren’t taken to avoid them. He expressed his concerns about wavering population growth and increments in the labor force.
Cohen commented on the same saying:
In addition, he placed emphasis on recruiting labor from other countries since the basic concept says more workers will lead to a higher GDP. This move is necessary to maintain the economic growth momentum in the long run. Cohen also states that since the country has been known for being supportive of immigrants, it is necessary that they appeal welcoming to fresh talent from around the world.
The fact that in the last 3 to 4 decades the U.S. median household income adjusted for inflation has not seen an upside was addressed. Thus, the opportunities for the coming generation have been stagnant compared to the previous generation. This is a significant problem as it can instigate an issue of political unrest. The discontentment among U.S. citizens might be a primary cause of the predicted economic downfall. The way that would avoid further developments in the U.S. economic crisis would be the integration of better pay at jobs and ensuring the protection of workers.
Cohen explained further saying the long-term prosperity of the nation “is very much tied to the health of the middle class, and to whether the wage increases for those families are adequate.” Therefore, the government has to see that unnecessary inflationary pressures and other factors don’t negatively affect their well-being.
Earlier, in December last year, U.S. inflation hit its highest in the last four decades as the Consumer Price Index (CPI) was at 7%, increasing from 6.8% the month before. Further, in the month of June this year, the CPI was reported to have increased 5.4% year-over-year than the estimated rise of 4.9%. This rise in inflation caused the U.S. dollar to spike. The U.S. Dollar to Euro (EUR/USD) value stood at 1.01 at the time of writing, which earlier had slipped below 1.18 and is continuing the trend. The hike in inflation and the U.S. dollar is also considered a prime reason affecting the U.S. economic crisis.