2023-09-26 11:10:00
© Archyde.com Goldman Sachs explains the Fed’s response to the rise in oil and its impact on growth
Arabictrader.com – In a note published by Goldman Sachs (NYSE:) on Tuesday, the bank’s analysts said that although the continued rise in consumption and economic growth may slow consumption and economic growth, it will only serve as a headwind that the US economy will be able to control. .
Goldman Sachs analysts wrote that while they expect higher oil prices to slow consumption growth during the fall and winter, they see it as unlikely to lead to a decline in consumer spending and GDP. The bank’s experts cited the following four reasons:
The size of the increase in oil prices is relatively small, as oil prices rose by only $20 per barrel, compared to an increase of $40 per barrel in the first half of 2008 and $45 per barrel during the first half of 2022. Our expectations for retail and wholesale prices and gasoline futures indicate that most Recovery has already occurred.
Offsetting the positive impact of higher capital spending in the energy sector will give a boost to GDP growth that outweighs the change in capital spending.
The decline in coal and natural gas prices since the beginning of the year, as well as the end of summer heat waves, will lead to lower electricity prices during the fall, and will also boost consumer incomes and potential consumption, offsetting nearly a quarter of the headwind from higher gasoline prices on growth.
Goldman Sachs does not expect the US Federal Reserve to tighten monetary policy in response to oil prices, as long as price movements tend to be short-lived. The Fed should only worry regarding the implications for overall price stability, and whether it contributes Rising oil prices change inflation expectations, but Goldman is relatively unconcerned by this risk, and does not expect the recent rises in the price of oil to significantly boost consumer inflation expectations.
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