Biggest risk to the economy now? Goldman says it’s a stock market correction.

In the complex and often unpredictable world of economics, experts are constantly scanning the horizon for the next big threat. While various factors like inflation, interest rates, and geopolitical events often grab the headlines, a recent warning from a major player on Wall Street suggests a different, more immediate danger: a significant stock market correction.

According to Goldman Sachs U.S. economist Pierfrancesco Mei, the health of the stock market is not just a concern for investors; it has direct implications for the broader economy. Mei’s analysis highlights a particular scenario that could have a notable impact on growth.

Specifically, Mei worries that a 10% stock market pullback occurring within the first half of the year could potentially cut U.S. GDP growth by half a percentage point. This isn’t a minor ripple; a reduction of this magnitude could translate into slower economic activity, affecting everything from job creation to consumer spending.

This perspective from Goldman Sachs serves as a potent reminder of how intertwined market performance is with the underlying economic fabric. It underscores the need for vigilance among policymakers and investors alike, as a significant shift in equity markets could quickly translate into tangible challenges for the overall economy.

Source: Original Article