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Concern about a U.S. recession in 2023 is growing, Goldman Sachs economists said in a recent report. Investors are getting nervous that surging inflation, exacerbated by the Ukraine-Russia conflict, will derail the 22-month-old U.S. economic recovery.

They’re not the only ones. Morgan Stanley strategists point to a “hotter and shorter cycle.”

S&P 500’s decline in recent weeks suggests ~40% likelihood of a U.S. recession, which would lead to lower valuations and earnings, according to Goldman Sachs Research. Separately, the firm’s economists, led by Jan Hatzius, estimate a 20-35% chance of a U.S. downturn over the next year, roughly in line with models based on U.S. Treasury yields.

“While our baseline forecast assumes that further service sector reopening and spending from excess savings will keep real GDP growth positive in the coming quarters, uncertainty around the outlook is higher than…

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