Former Goldman Sachs CEO Blankfein believes the economy is at risk of possibly going into a recession.Speaking to the CBS programme Face the Nation, Blankfein said businesses and consumers should be prepared for this possible probability.The Fed has the right tools to fight inflation, but its actions will take time to filter through.His comments coincided with Goldman Sachs cutting its US growth forecast for 2022 and 2023 to 2.4% and 1.6%, down from 2.6% and 2.2% respectively. However, Goldman economists note that there is a good chance of avoiding a jump in the unemployment rate as the Fed tightens monetary policy.They added that by the end of next year, the unemployment rate is expected to rise to 3.7%.After a 50-basis point rate hike in May, the biggest rate hike since 2000, Fed Chairman Jerome Powell ruled out a 75-basis point rate hike at the upcoming meetings. However, he noted that an additional 50 basis point increase was expected in June as well as July. According to Powell, even though the US economy shrank by 1.4% in the first quarter, the Fed has a good chance of doing well as it aggressively tightens monetary policy this year.In contrast, Powell acknowledged that some elements would remain outside the Fed's control, including increasing pressure on inflation due to the tense geopolitical situation in Ukraine and the quarantine restrictions imposed by China.
