Goldman Sachs says the US should narrowly avoid recession - says this time its different

Earlier from Goldman Sachs, jacking their Fed funds forecast higher:

• Goldman Sachs now sees the Fed hiking to 5.00-5.25%

More, this time on the economy ahead:

The US should narrowly avoid recession as core PCE inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term slows from 5% now to 3% in late 2023 with a 0.5pp rise in the unemployment rate.

To keep growth below potential amidst stronger real income growth, we now see the Fed hiking another 125bp to a peak of 5-5.25%. We don't expect cuts in 2023.

How can core inflation fall so much with such a small employment hit? The reason, we think, is that this cycle is different from prior high-inflation periods.

• First, post-pandemic labor market overheating showed up not in excessive employment but in unprecedented job openings, which are much less painful to unwind.
• Second, the disinflationary impact of the recent normalization in supply chains and rental housing markets still has a long way to go. And third, long-term inflation expectations remain well-anchored.