Goldman Sachs reduces U.S. growth outlook for 2023

Goldman Sachs Group Inc. reduced its growth estimates for the U.S. economy in 2023 after recently predicting an increase in the Federal Reserve interest rate. 

The forecast for increase in the U.S. gross domestic product will remain at 0% for 2022 but will increase to 1.1% next year, down from the previous 2023 forecast of 1.5%, according to a prediction Friday from the finance firm analyzed by Bloomberg.

Over the last two weeks, Goldman forecast that its federal funds rate would rise by 75 basis points for a terminal rate forecast of 4% to 4.25% by the end of 2022.

"This higher rates path combined with recent tightening in financial conditions implies a somewhat worse outlook for growth and employment next year," the company's economists said. "Our growth forecast is slightly below consensus and implies a below-potential growth trajectory that we believe is necessary to cool wage and price inflation."