It seems that consumers are more confident with the economy and so is Goldman Sachs.
Remember last year when China devalued its currency and the market went nuts? Well, so much for that.
The subsequent tightening in
financial conditions that came with the bold currency move has vanished,
according to Goldman Sachs. The bank said its proprietary Financial
Conditions Index has returned to its August 2015 level, providing a
bright spot in an economy that otherwise has been lackluster.
Goldman economists
Jan Hatzius and Chris Mischaikow said in a note to clients. "The
implications for U.S. growth are quite positive."
http://www.cnbc.com/2016/04/19/goldman-sachs-sees-upside-risk-for-us-conomy.html
It is relieving that Goldman Sachs' Financial Conditions Index has returned to its August 2015 level. It is also relieving that consumers are becoming more confident. And just like we learned in class, the higher the confidence, there is typically a higher consumption rate leading to an increased national GDP. I am interested to see if the economy will fulfill Jan Hatzius and Chris Mischaikow's expectations of positive growth in the upcoming months.
ReplyDeleteIt is very interesting that you brought up this article as we just watched Too Big to Fail. It is also interesting that the S&P 500 has boomed by 11.4% over the last three months. Goldman also believes that the Fed will raise interest rates later this year. I completely agree with Goldman that the interest rates will increase.
ReplyDeleteSimilar to another article which talked about the record highs for the S&P, this is another very encouraging piece of news. People have been very worried about the future of the US economy as there is a large amount of volatility in foreign markets. However, this shows that the US economy is able to stand strong, even in the face of adversity. Hopefully this trend continues and the US economy becomes a beacon of light for international markets.
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