BUSINESS Goldman Sachs Predicts Recession Will Hit Sometime in the Next 12 Months By Staff Friday, September 23, 2022 3:11 PM Goldman Sachs is predicting the U.S. economy will continue to take a downturn as recession fears grow. GS Research indicates that a recession is likely to happen within the next 12 months. However, analysts believe that the contraction is not expected to be as deep as previous recessions, looking to the downturn of 1960-61 and 2001 as examples of when unemployment increased by 2 percentage points. Analysts believe that the post-COVID recession will be mild and that the unemployment rate increase should only be approximately 1 percentage point. The reason behind this is a continued glut in jobs versus workers. It’s believed the imbalance between available jobs and workers should absorb much of that contraction without triggering a large rise in unemployment. “Recent preliminary evidence suggests this is possible,” said senior global economist Daan Struyven. “In fact, the U.S. job openings rate has declined by 0.7 percentage points since March while the unemployment rate has actually declined by 0.1 percentage points. This suggests that the slowdown in output growth is likely to have a smaller-than-usual effect on employment, which tends to drop sharply in traditional U.S. recessions.”Struyven believes consumers will not feel the full economic shock of the decline, and that paired with inflation, spending may even grow. “While slower job growth will likely weigh on real disposable income growth, sharply lower headline inflation in areas such as gasoline and durable goods could support real disposable income growth, which has now likely bottomed,” he said. He thinks the strength of private-sector balance sheets (partly built up through the pandemic)—among households, businesses and bank —could eventually dampen spillovers from any potential real income weakness into spending by consumers during an incoming recession.Struyven noted there are still clear drives for growth in the U.S. economy and as the normalization of COVID-sensitive sectors returns industries like tourism and office work will rebound.