Goldman Sachs analysts warn: The U.S. economy may accelerate again, be cautious of a shift in Federal Reserve monetary policy

According to the Zhitong Finance APP, on September 28, Goldman Sachs analysts Cosimo Codacci-Pisanelli and Rikin Shah stated in their latest report that the likelihood of a re-acceleration of the U.S. economy is rising. This expectation is based on multiple favorable factors, including the resilience of the labor market, expectations of fiscal stimulus, and a loose financial environment.

The report indicates that the prospect of economic re-acceleration will have significant implications for the Federal Reserve's monetary policy path, especially in the context of selecting a new chairperson for the Federal Reserve. Goldman Sachs pointed out that the key question is whether the Federal Reserve will lower interest rates below neutral levels while the economy is performing healthily, and whether it can implement a rate hike policy during Trump's term.

Part. 0 1  Multiple Tailwinds Boosting Economic "Re-Acceleration"

Goldman Sachs' analysis shows that the U.S. economy is demonstrating strong performance across several key indicators.

According to Goldman Sachs, its U.S. Macro Surprise Index (US MAP surprise index) has recently surged, and the number of initial jobless claims this week is also encouraging. The bank's Global Investment Research (GIR) expects the U.S. third-quarter GDP annualized growth rate to reach a healthy level of 2.6%.

The report lists the key factors driving this risk:

Loose Financial Conditions

The good performance of risk assets, expectations of future rate cuts by the Federal Reserve, and a weakening dollar have collectively created a loose financial environment.

Fiscal and Investment

A positive fiscal policy impulse is expected in the first half of next year, while capital expenditures in the artificial intelligence sector will continue to provide growth momentum.

Consumers and Deregulation

The U.S. consumer base remains solid, and the impact of deregulation cannot be ignored.

Goldman Sachs stated that the combination of these tailwinds increases the likelihood of unexpected economic growth next year.

Part. 0 2  Monetary Policy Path Depends on New Federal Reserve Chair

Goldman Sachs emphasizes that the Federal Reserve's policy path for 2025 and 2026 presents a starkly different story.

For the remainder of this year, Federal Reserve Chair Jerome Powell's remarks this week summarize the current situation well: recent job growth has been below the "break-even" level. Therefore, Goldman Sachs believes:

Tariffs appear to be a one-time adjustment to price levels, while inflation in the service sector continues to slow.

This provides a path for the Federal Reserve to normalize policy rates closer to neutral levels (in the 3-3.5% range), as maintaining restrictive policies for too long could unnecessarily weaken the labor market further. Goldman Sachs' baseline scenario remains a 25 basis point rate cut in both October and December of this year.

Regarding next year's monetary policy path, in the face of the risk of economic re-acceleration, Goldman Sachs believes that the future largely depends on the assessment of the policy tendencies of the new Federal Reserve chair The report raises two core questions:

Even if the economy is running healthily, will the Federal Reserve lower interest rates below neutral levels?

During a potential Trump administration, will the Federal Reserve have the ability to raise interest rates to address economic overheating?

In response to the uncertainty, Goldman Sachs has proposed two distinctly different trading strategies.

If the market expects policy rates to remain low (i.e., the Federal Reserve will not or cannot effectively tighten policy), then the correct trade is to go long on U.S. long-term breakeven inflation rates, go long on gold, and continue holding risk assets.

If the market believes the Federal Reserve will respond to a re-acceleration of the economy and tighten policy, then the U.S. Treasury yield curve should become steeper.

The report specifically mentions that the SFRM6/M8 spread, which measures the market's expectations for mid-2026 interest rates, is still hovering around flat (currently at -5 basis points), indicating that the market has not fully priced in the risk of rate hikes.

In this scenario, the yield curve between the 2-year and 10-year Treasury bonds should also steepen