Summary
- Goldman Sachs warned that a U.S. stock-market correction could, in the short term, become the biggest risk factor for the U.S. economy.
- A Goldman Sachs economist projected U.S. GDP growth in 2026 at 2.5%, while estimating that if the stock market falls 10%, growth could decline by about 0.5 percentage points, and in the event of a 20% plunge, by nearly 1 percentage point.
- Goldman Sachs said that the wealth effect, the K-shaped economy, and increased market volatility in midterm-election years could combine such that even a relatively modest stock-price decline may dampen consumer sentiment and lead to slower growth.
Goldman Sachs warned that a correction in U.S. equities could, in the short term, become the biggest risk factor for the U.S. economy.
According to overseas business news channel Walter Bloomberg on the 24th (local time), Goldman Sachs economist Pierfrancesco Mei projected U.S. GDP growth in 2026 at 2.5%, but said that if the stock market falls 10%, growth could decline by about 0.5% points, and in the event of a 20% plunge, it could be reduced by nearly 1% point.
The biggest risk factor is the so-called 'wealth effect.' With high-income households that hold large amounts of equities leading consumption, a drop in stock prices could translate directly into a slowdown in spending, he explained. This could further exacerbate the 'K-shaped economy,' in which low-income households are already struggling.
In addition, market volatility tends to increase in years with midterm elections. Historically, the average peak-to-trough decline during the year is around 19%; a 10% drop is classified as a correction, and a 20% drop as a bear market.
Goldman Sachs said that "even a relatively modest decline in stock prices can dampen consumer sentiment and lead to slower growth."
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
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