Brace for a lengthy period of bleh economic growth.
That's the new warning from Goldman Sachs Chief Economist Jan Hatzius.
"Our expectation is that we'll have a lengthy period of below-trend growth," Hatzius told Yahoo Finance Live at the Goldman Sachs Communacopia + Technology Conference this week, "where the reasons for why the economy is softer shift somewhat from the consumer maybe earlier in the year to housing and maybe other areas. The international economy, of course, looks quite weak. So the foreign trade impulse is probably going to be pretty negative."
One area of the economy that Hatzius does find concerning is the U.S. housing sector as it battles with rising interest rates. Signs of a sizable housing slowdown have picked up in recent months as the 30-year mortgage rate climbed above 6% on Thursday for the first time since 2008.
"Housing still has a significant amount of weakness ahead," Hatzius said.
Existing home sales fell for the sixth consecutive month in July, according to the National Association of Realtors. Sales dropped 5.9% from June and 20.2% from a year ago. The median existing home sales price rose 10.8% year-over-year to $403,800 but was slightly down from a record high in June.
The Commerce Department, meanwhile, reported that sales of new U.S. single-family homes tanked 12.6% in July. At 511,000 units in the month, new home sales were at the lowest level since January 2016.
Despite the various economic pressures, Hatzius still isn't in the camp that the U.S. economy will slip into a recession in 2023. But things won't be pretty, either, the closely followed economist hinted.
"We don't have a recession in our forecast," he said. "Our best guess is that we'll still see positive, but very subdued growth. Recession is definitely a very significant probability. We've said about a 1 in 3 [chance] over the next year. And I think that's a reasonable estimate. A lot of it is going to depend on what happens to inflation, how quickly does it come down, how much more does the Fed have to do. And we are seeing some signs of improvement. But it's too early to be confident of that."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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