If you thought the government shutdown was a tempest in a teapot, maybe think again.
Goldman Sachs is reducing its forecasts for U.S. growth from 2022 on concern over the new University of Michigan survey measurement for labor market polarization. The new measure, which is based on responses from hundreds of thousands of employers, involves 500 questions per month on a variety of topics about the industry in which a person works. Goldman says it’s a significant improvement over its earlier survey and should “eliminate idiosyncratic idiosyncrasies and deviation from the trade-weighted CPI.”
However, Goldman is lowering its growth forecast to 2.5 percent for 2022 from 3 percent.
The bank says it’s raising its government debt forecast for 2018 to 2.3 percent from 2.1 percent. For 2019, the forecast is unchanged at 2.2 percent, though Goldman says it sees a small possibility of a recession starting by the end of 2018.
“Macro uncertainty remains elevated and policymakers appear broadly supportive of a growth-friendly policy framework,” Goldman analysts wrote in a research note.
The measure, which uses data from data, consumer credit and more, is designed to aid in ascertaining the true labor market situation. The revamped measure also includes 13 questions based on Bloomberg survey.
The new survey is backed by key measures from the American Enterprise Institute, which found that wages and hours worked were improving and average weekly earnings increased.