Economic Outlook

Disinflation Ahead

October 2022

Jan Hatzius Goldman, Sachs & Co. +1 212-902-0394 jan.Hatzius@gs.com

Chief Economist

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest
that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
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Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.
 Progress in Slowing Growth to a Below-Potential
Pace and the Narrowing Jobs-Workers Gap

Percent The Slowdown Required to Rebalance the Labor Market Percent

6.5 and Calm Wage Growth and Inflation 6.5
6.0 6.0
5.5 Starting Point 5.5
5.0 Current 5.0
4.5 4.5
4.0 Required, GS Estimate 4.0
3.5 3.5
3.0 3.0
2.5 2.5
2.0 2.0
1.5 1.5
1.0 1.0
0.5 0.5
0.0 0.0
GDP Growth* Jobs-Workers Gap** Wage Growth Core PCE Inflation

Below-potential ...lowers the jobs- ...which slows down ...to bring down
GDP growth... work ers gap... wage growth... core inflation
* Current GDP growth shows GS forecast for next 4 quarters
** Jobs-workers gap is expressed as a percentage of the civilian noninstitutional population

Global Investment Research 2

 Sharp Decline in Real Income Has Run Its Course

Percent change vs. Dec. 2020 Percent change vs. Dec. 2020
30 Household Disposable Income 30
Transfers (Nominal)
25 25
Other Income (Nominal)
20 Inflation 20
Real Disposable Income
15 Real Disposable Income Trend 15
10 10
5 5
0 0
-5 -5
-10 -10
-15 -15
Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov
2021 2022 2023

Source: Goldman Sachs Global Investment Research.

Global Investment Research 3
 Financial Conditions Weigh Heavily on Growth

Tightening

Source: Goldman Sachs Global Investment Research.

Global Investment Research 4
 Housing Activity Is Starting to Fall Sharply

Index NAR Housing Affordability Index Index Millions (saar) Total Home Sales (NHS+EHS) Millions (saar)
250 250 9 9

200 200 8 8

150 150 7 7

100 100 6 6

50 50 5 5

0 0 4 4
1972 1978 1984 1990 1996 2002 2008 2014 2020
Note: The NAR Housing Affordability Index measures w hether a typical family earns
enough to qualify for a 30-year fixed mortgage on a typical single-family home w ithout 3 3
spending >25% of their income on payments. A score of 100 means that a family w ith the
median income earns exactly enough to qualify for a mortgage on a median-priced home. 2000 2003 2006 2009 2012 2015 2018 2021 2024

Source: Goldman Sachs Global Investment Research.

Global Investment Research 5
 Payroll Growth Remains Strong But Is Starting to Slow

Thousands Change in Employment Thousands

Establishment Survey Nonfarm Payrolls
1,000 ADP Nonfarm Private Payrolls 1,000
Household Survey (6mma)
Household Survey, Adj to Establ Surv Def (6mma)
800 800

600 600

400 400

200 200

0 0
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22

Source: Haver Analytics, Goldman Sachs Global Investment Research.

Global Investment Research 6

 Jobs-Workers Gap Remains Very Large...

Percent of population US Jobs-Workers Gap Percent of population

70 Jobs of which: 70
Job Openings*
Employment
Workers (Labor Force Participation)

65 65

60 60

55 55
1950 1960 1970 1980 1990 2000 2010 2020
*Extrapolated before Dec 2000 using the newspaper help-wanted index based on methodology by Regis Barnichon, San Francisco Fed.

Source: Goldman Sachs Global Investment Research.

Global Investment Research 7
 …But Has Begun to Edge Down in Recent Months

Thousands US Jobs-Workers Gap Thousands

7000 7000
6000 6000
5000 5000
4000 4000
3000 3000
Required b y End-2023, GS Estimate
2000 2000
1000 1000
0 0
-1000 -1000
-2000 -2000
-3000 -3000
-4000 -4000
Jan-2021 Jul-2021 Jan-2022 Jul-2022
Note: The jobs-w orkers gap captures the difference between total labor demand (i.e., employment plus job
openings) and total labor supply (i.e., the labor force). When available, w e match job openings data from the
preceding month and unemployment data from the current month to account for the timing of data releases.

Source: Haver Analytics, Goldman Sachs Global Investment Research.

Global Investment Research 8

 Job Openings Continue to Fall

Millions Z-scores
Measures of Job Openings
12 1.5
JOLTS (left)
Linkup (right) 1.2
11
Indeed (right) 0.9
10 0.6
Average of Indeed + Linkup (right)
9 0.3
0.0
8
-0.3
7 -0.6

6 -0.9
-1.2
5
-1.5
4 -1.8
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
2019 2020 2021 2022

Source: Indeed, Linkup, Haver Analytics, Goldman Sachs Global Investment Research.

Global Investment Research 9

 Not Much Room for Labor Force Participation to Rise

Percent Labor Force Participation Rate Decomposition Percent Percent Percent

65 65 18 Share of Prime-Age Respondents Not in the Labor 18
LFPR Exits by 16-24 Year Olds
Force Who Report Being Prevented from Searching
Exits by 25-54 Year Olds Early Retirements for a Job by Covid
64 Demographic Exits 16 16
64
930k 14 14
63 940k
63
990k
12 12
62
62 10 10
61
61 8 8
60
6 6
60
59
4 4

58 59
2 2

57 58 0 0
Jan-19 Oct-19 Jul-20 Apr-21 Jan-22 Oct-22 Jun-20 Oct-20 Feb-21 Jun-21 Oct-21 Feb-22 Jun-22

Source: Goldman Sachs Global Investment Research.

Global Investment Research 10
 Tentative Signs of Slower Wage Growth

Index Percent change, year ago

60 Monthly US Wage Surveys (left)* 6

50 GS Wage Tracker (right) 5

40 4

30 3

20 2

10 1

0 0

-10 -1
2001 2004 2007 2010 2013 2016 2019 2022
* Average of Dallas Fed manufacturing, Dallas Fed services, Richmond Fed manufacturing, Richmond Fed
services, NY Fed services, and NFIB. Where available, w e average current and expected wage changes for each
survey. Values before the introduction of the more recent surveys are backcasted statistically.

Source: Goldman Sachs Global Investment Research.

Global Investment Research 11
 Declining Quit Rate Also Indicates that the Labor
Market Is Moving Back Toward Balance

Percent JOLTS Quits Rate Percent

3.5 3.5

3.0 3.0

2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0

0.5 0.5

0.0 0.0
2000 2003 2006 2009 2012 2015 2018 2021

Source: Haver Analytics, Goldman Sachs Global Investment Research.

Global Investment Research 12

 The Shift in the Beveridge Curve Is Misleading As Few
Unemployed Workers Applied for Jobs in 2020

Beveridge Curve: Adjusted Beveridge Curve:

9 9 Job Openings Rate vs. Unemployed and Applying for Jobs
Job Openings Rate vs. Unemployment Rate

8 8 Sep 2021 - Present (since

unemployment benefits expired)
7 7
Job Openings Rate (%)

Job Openings Rate (%)

6 6 Apr 2020 - Aug 2021
2023, GS
Apr 2020 - Present Forecast
5 5

4 4
Jan 2009 - Mar 2020
3 3
Jan 2009 - Mar 2020
Jan 2001 - Dec 2008
2 Jan 2001 - Dec 2008 2

1 1
3 4 5 6 7 8 9 10 11 12 13 14 15 2 3 4 5 6 7 8
Unemployment Rate Limited to
Unemployment Rate (%)
Workers Who Applied for Jobs (%)

Source: Haver Analytics, Goldman Sachs Global Investment Research.

Global Investment Research 13

 Little Sign of a Structural Increase in Mismatch

Index Lazear-Spletzer Job Mismatch Index, Index Percent Share of Job Postings and Percent
0.35 by Industry 0.35 12 Searches for Remote Work 12
Postings Searches
0.30 0.30
10 10

0.25 0.25
8 8
0.20 0.20

6 6
0.15 0.15

0.10 0.10 4 4

0.05 0.05
2 2

0.00 0.00
2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

0 0
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22

Source: Goldman Sachs Global Investment Research.

Global Investment Research 14
 Lower Headline, Sticky Core

Percent change, Headline CPI Percent change,

monthly annual rate monthly annual rate
Core PCE
20 20
Dallas Trimmed Mean PCE
15 15

10 10

5 5

0 0

-5 -5

-10 -10
Jan-2020 Jul-2020 Jan-2021 Jul-2021 Jan-2022 Jul-2022

Source: Haver Analytics, Goldman Sachs Global Investment Research.

Global Investment Research 15

 Falling Energy Costs and Dollar Appreciation Are
Putting Downward Pressure on Goods Prices

Cents per gallon Cents per gallon Percent change, year ago (inverted) Percent change, year ago
500 RBOB Gasoline Price 600 -20 10
FRB Nominal Trade-Weighted US Dollar (left)
Futures
Import Price Index ex-Fuels (right)
450
-15 8
500
400
-10 6
350
400 -5 4
300
0 2
250 300

5 0
200
200
150 10 -2

100 15 -4
100
50 20 -6

0 0
2010 2012 2014 2016 2018 2020 2022
25 -8
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Source: Haver Analytics, Goldman Sachs Global Investment Research.

Global Investment Research 16

 Supply Chain Disruptions Are Diminishing and
Inventories Are Rebounding

Z-Scores Z-Scores Percent of avg. 2019 level Percent of avg. 2019 level
5 5 Car Inventories
110 110
Average Supplier Delivery Time, Business Surveys
New Inventory
NY Fed Global Supply Chain Pressure Index 100 100
4 4 Used Inventory
90 90
3 3
Longer 80 80
delivery
2 times 2 70 70

60 60
1 1
50 50

0 0 40 40

30 30
-1 -1
20 20
-2 -2 10 10

0 0
-3 -3
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Source: Goldman Sachs Global Investment Research.

Global Investment Research 17
 Health Care Will Accelerate on Medicare Fee Bump and
Rising Costs Driven by a Very Tight Labor Market

Percent change, year ago Percent change, year Percent of labor force Percent of labor force
5.0 5.0 10 Jobs-Workers Gap, Healthcare Industry 10
PCE Healthcare Services

4.5 Ex Coronacrisis Programs 4.5 8 8

4.0 Medicare Fee Update, Annual 4.0

Annoucement* 6 6
3.5 3.5
4 4
3.0 3.0

2.5 2.5 2 2

2.0 2.0 0 0

1.5 1.5
-2 -2
1.0 1.0
-4 -4
0.5 0.5

0.0 0.0 -6 -6
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2000 2005 2010 2015 2020

Source: Goldman Sachs Global Investment Research.

Global Investment Research 18
 CPI Rent Inflation Has Probably Peaked on a
Sequential Basis, But Is Likely to Stay Very High

Percent change,
mom annual rate
40
Zillow: Observed Rent Index* Percent change, Thousands Thousands
Apartment List: Asking Rents** mom annual rate
1,000 Housing Starts (5+ Units), 3mma 1,000
CPI: Rent of Primary Residence
40 Housing Units Under Construction (5+ Units)

30 30 800 800

20 20
600 600

10 10

400 400
0 0

-10 -10 200 200

-20 -20
Jan-2020 Sep-2020 May-2021 Jan-2022 Sep-2022 0 0
*SA by Haver **SA by GS 1985 1990 1995 2000 2005 2010 2015 2020

Source: Haver Analytics, Goldman Sachs Global Investment Research.

Global Investment Research 19

 Long-Term Inflation Expectations Back to Normal,
But Short-Term Inflation Expectations Remain High

Percent Percent Percent Percent

5.5 University of Michigan Survey of Consumers, 5.5 7.0 NY Fed Survey of Consumer Expectations, 7.0
Median Inflation Expectations Median Inflation Expectations
Next 1yr 6.5 6.5
5.0 5.0 1yr Ahead
Next 5-10yr 3yr Ahead
6.0 6.0
5yr Ahead
4.5 4.5
5.5 5.5

4.0 4.0 5.0 5.0

4.5 4.5
3.5 3.5
4.0 4.0

3.0 3.0 3.5 3.5

3.0 3.0
2.5 2.5
2.5 2.5
2.0 2.0
2.0 2.0

1.5 1.5 1.5 1.5

2010 2012 2014 2016 2018 2020 2022 2010 2012 2014 2016 2018 2020 2022

Source: Goldman Sachs Global Investment Research.

Global Investment Research 20
 We Expect the Major Inflation Measures to Return to
2½% in 2023, Mainly Because of Goods

Percent change, year ago Percent change, year ago Percent change, year ago Percent change, year ago
10 Contributions to Year-on-Year Headline CPI Inflation 10 Contributions to Year-on-Year Core PCE Inflation
6 6
9 Energy 9 Supply-Constrained Durable Goods
8 Food GS Forecast 8 Other Goods
Travel 5 5
7 7 Travel
Supply-Constrained*
6 6 Other Services
Other 4 4
Shelter Healthcare
5 5
Headline CPI Shelter
4 4 Core PCE
3 3
3 3
2 2
2 2
1 1
0 0
-1 -1 1 1
-2 -2
-3 -3 0 0
May-18

May-19

May-20

May-21

May-22

May-23
Jan-18

Sep-18
Jan-19

Sep-19
Jan-20

Sep-20
Jan-21

Sep-21
Jan-22

Sep-22
Jan-23

Sep-23
Jan-24

GS Forecast
-1 -1

May-18

May-19

May-20

May-21

May-22

May-23
Jan-20
Jan-18

Sep-18
Jan-19

Sep-19

Sep-20
Jan-21

Sep-21
Jan-22

Sep-22
Jan-23

Sep-23
Jan-24
* New and used cars, car parts, and household furnishings and operations.

Source: Goldman Sachs Global Investment Research.

Global Investment Research 21
 Another 75bp in November Is Likely, Followed by a
Slowdown in the Hiking Pace

Percent Rate Hikes at FOMC Meetings Percent Percent Peak Federal Funds Rate Percent
5.0 4.50- 5.0 5.0 5.0
24bp 4.75%
25bp 4.60% GS
4.5 50bp 25bp 4.5 Market Pricing
4.5 4.5
4.0 Size of 75bp 68bp 4.0
rate hike
3.5 3.5 4.0 4.0
75bp
3.0 3.0
3.5 3.5
75bp
2.5 2.5
FOMC Longer-Run
Rate Estimate 3.0 3.0
2.0 2.0
75bp
1.5 1.5 2.5 2.5
1.0 50bp Actual 1.0
GS Forecast 2.0 2.0
0.5 Market Pricing 0.5
3
0.0 0.0 1.5 1.5
Jan-22 Mar-22 May-22 Jul-22 Sep-22
May Jun Jul Sep Nov Dec Feb Feb 2023
2022 2023 Level

Source: Goldman Sachs Global Investment Research.

Global Investment Research 22
 Arguments Against a (Deep) Recession: 1) Excess Labor
Demand Limits Feedback from Spending to Jobs

Thousands Thousands

0 0

-50 -50

-100 -100

-150 -150

Cumulative Impact on Payroll Employment Over 12 Months

of a -1pp Shock to the GS Current Activity Indicator (Ex Labor),
-200 by Jobs-Workers Gap Quintiles -200

Lower Job s-Workers Gap Higher Job s-Workers Gap

-250 -250
Bottom Second Third Fourth Top

Jobs-Workers Gap Quintile

Source: Goldman Sachs Global Investment Research.

Global Investment Research 23
 2) Healthy Private-Sector Balance Sheets

%#N/A
of GDP Private Sector Financial Balance % of GDP Percent Percent
(Income Less Spending, Households and Businesses) Chances of Avoiding a Recession For 2 Years After Last Hike,
30#N/A 30 100 100
#N/A by Private Sector Financial Balance Percentile*
*Percentiles are defined
25#N/A 25 90 by the within-country rank Current US 90
#N/A of the 12MMA of the
0.441554 80 private private sector 77% 80
20 20 financial balance (as % of
0.159281 70
GDP) for each G10
Higher Private Sector 70
country averaged over the
-0.14708
15 15 tightening cycle relative to Financial Balance
60%
-0.65107 60 its historical distribution 60
over time.
-0.24243
10 10
50 50
0.739847 44%
5
2.010263 5 40%
40 36% 40
3.073543
0
3.856377 0 30 30
4.251463
-5 -5 20 20
3.310254
1.384614 10 10
-10 -10
-0.39821
1950 1960 1970 1980 1990 2000 2010 2020 0 0
-2.3043
All >20th pctl >40th pctl >60th pctl >80th pctl
-2.31396

Source: Goldman Sachs Global Investment Research.

Global Investment Research 24
 3) The Post-Covid Rebalancing Continues…

Percent of 2022 real GDP Percent of 2022 real GDP

32 51
Real Goods Consumption (left)
30 Real Services Consumption (right) 49

28 47

26 45

24 43

22 41

20 39

18 37

16 35
2015 2016 2017 2018 2019 2020 2021 2022

Source: Goldman Sachs Global Investment Research.

Global Investment Research 25
 3) …And Goods Slowdown Overstates Recession
Risks

Source: Goldman Sachs Global Investment Research.

Global Investment Research 26
 The Growth Hit from Fiscal Policy and Financial
Conditions Is Smaller in Europe than in the US

Percentage points, Percentage points,

annual rate annual rate
4 Euro Area 4
UK
3 3
US
2 2

1 1

0 0

-1 -1

-2 -2

-3 -3

-4 -4

-5 -5

-6 -6
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2021 2022 2023

Source: Goldman Sachs Global Investment Research.

Global Investment Research 27
 But the Energy Shock is Much Bigger

Source: Haver, Goldman Sachs Global Investment Research.

Global Investment Research 28

 Russian Gas Used to Supply 10% of EU Energy, But Is
Now Largely Shut

% Natural Gas From Russia as Share of Energy Supply %

25 25

Germany
20 20
France
Italy
Euro Area
15 15

10 10

5 5

0 0
1990 2000 2010 2020
*Latest v alues f or Euro Area estimated f rom daily v olume of gas piped to Europe.

Source: Bloomberg, Goldman Sachs Global Investment Research.

Global Investment Research 29
 Headline IP Resilience vs. Deterioration in Timelier and
Gas-Intensive Activity Measures

Gas-intensive survey measures are the weighted averages of survey values in the five sectors with the highest 2019 ratio of gas usage to production in a given country/area. S&P EU Sector
PMIs include data from non-Euro area countries, including the Czech Republic, Poland, and UK.

Source: Goldman Sachs Global Investment Research.

Global Investment Research 30
 A Moderate Recession in the Euro Area and the UK

Percent change, Percent change, Percent change, Percent change,

quarterly Euro Area/UK: Real GDP Growth Forecast quarterly quarterly EMU-4: Real GDP Growth Forecast quarterly
1.0 1.0 2 2
Germany
UK
0.8 0.8 France
Euro Area
1.5 Italy 1.5
0.6 0.6
Spain

0.4 0.4 1 1

0.2 0.2
0.5 0.5
0.0 0.0

-0.2 -0.2 0 0

-0.4 -0.4
-0.5 -0.5
-0.6 -0.6

-0.8 -0.8 -1 -1
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2022 2023 2022 2023

Source: Goldman Sachs Global Investment Research.

Global Investment Research 31
 The ECB Doesn’t Look Likely to Blink

Percent Percent
Share of Inflation- and Growth-Related Words About Inflation in Policy Statements
100 This Year 100

90 90

80 80

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
Fed BoC BoE RBA ECB

Source: Goldman Sachs Global Investment Research.

Global Investment Research 32
 China Growth Recovering from the Lockdown Plunge,
But Full-Year Estimates Continue to Erode

Source: Goldman Sachs Global Investment Research.

Global Investment Research 33

 Covid Remains a Drag on Growth

Percent Percent Percent Beds per 100k

GDP Share of Cities With High/Mid-risk Districts* Indicators of Covid Health Risk
of population people
45 45
35 40
Unvaccinated elderly** (left)
40 Oct.07: 40
35% 30 ICU beds (right) 35
35 35
30
25
30 30
25
25 25 20
20
20 20
15
15
15 15
10
10
10 10
New risk district 5
5 5 5
definition

0 0 0 0
Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 China Hong Japan US Spain China Germany US
Kong

Source: Goldman Sachs Global Investment Research.

Global Investment Research 34

 A Long Decline for China’s Housing Sector

Million
New Apartments Needed Each Year in Urban China
Million Percent change, Percent change,
mom annual rate mom annual rate
24 24
Demand Sources: 35 China 70-City Weighted Average Housing Prices 35

Property Investment 30 30
20 Replacement 20
Demographic* 25 25
Total
20 20
16 16
15 15

10 10
12 12
5 5

8 8 0 0

-5 -5

4 4 -10 -10

-15 -15
0 0 -20 -20
2010 2015 2020 2025 2030 2035 2040 2045 2011 2013 2015 2017 2019 2021
*Demographic demand sources include urbanization, population growth, and household size growth.

Source: Haver Analytics, World Bank, Goldman Sachs Global Investment Research
Global Investment Research 35
 Globalization Drag Is Behind Us (and May Reverse)

Source: Goldman Sachs Global Investment Research.

Global Investment Research 36
 Global GDP Forecasts

Real GDP Growth Annual Average Q4/Q4 Next 4 Quarters

2021 2022 2023 2022 2023 2022Q3-2023Q2 Potential
Percent Change yoy
Actual GS Consensus GS Consensus GS GS GS GS
US 5.9 1.8 1.6 1.0 0.7 0.2 1.1 1.2 1.8
Euro Area 5.2 3.2 3.0 -0.4 0.2 1.2 0.1 -0.8 1.1
Germany 2.6 1.6 1.5 -0.7 -0.4 0.5 -0.1 -1.2 1.4
France 6.8 2.7 2.5 0.4 0.5 0.7 0.6 0.2 1.1
Italy 6.6 3.4 3.3 -0.5 0.2 0.8 -0.1 -1.1 0.6
Spain 5.5 4.6 4.5 0.6 1.4 1.4 0.9 0.0 1.1
Japan 1.7 1.7 1.6 1.7 1.5 2.0 1.3 1.7 1.0
UK 7.4 3.4 3.5 -0.3 -0.2 0.4 0.2 -0.6 1.4
Canada 4.5 3.1 3.3 1.0 1.0 1.8 1.3 0.6 1.9
China 8.1 3.0 3.3 4.5 5.0 3.3 4.5 6.2 5.0
India 8.3 7.0 7.1 6.4 5.7 4.7 4.4 10.7 6.0
Brazil 4.6 2.9 2.5 0.9 0.9 2.8 1.4 0.3 1.9
Russia 4.7 -6.0 -5.3 -2.6 -3.0 -13.3 1.2 -4.7 1.7

World 6.3 3.2 3.1 2.5 2.5 1.9 2.6 3.0 3.1

Note: All forecasts calculated on calendar year basis. 2021 are GS forecasts when not available. 2022-2023 are GS forecasts. Potential growth estimates are for 2022, based on our
supply-side model and exclude scarring. IMF forecasts used for India 2023 consensus when quarters not available in Bloomberg.

Source: Bloomberg, Goldman Sachs Global Investment Research.

Global Investment Research 37

US Economic Forecasts

THE US ECONOMIC AND FINANCIAL OUTLOOK

(% change on previous period, annualized, except where noted)
2020 2021 2022 2023 2024 2025 2022 2023
(f) (f) (f) (f) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
OUTPUT AND SPENDING
Real GDP -2.8 5.9 1.8 1.0 1.6 1.9 -1.6 -0.6 1.9 1.0 0.8 1.0 1.3 1.3
Real GDP (annual=Q4/Q4, quarterly=yoy) -1.5 5.7 0.2 1.1 1.9 1.9 3.7 1.8 1.6 0.2 0.8 1.2 1.0 1.1
Consumer Expenditures -3.0 8.3 2.6 1.3 1.7 1.9 1.3 2.0 1.1 1.3 1.3 1.3 1.5 1.5
Residential Fixed Investment 7.2 10.7 -9.5 -11.3 1.1 2.0 -3.1 -17.8 -22.7 -17.5 -10.0 -5.0 -2.5 2.5
Business Fixed Investment -4.9 6.4 3.4 2.2 3.3 3.6 7.9 0.1 4.1 1.3 2.1 2.3 2.4 3.0
Structures -10.1 -6.4 -7.9 -2.1 2.4 3.0 -4.4 -12.7 -5.7 -4.0 0.0 0.0 1.0 2.0
Equipment -10.5 10.3 3.9 1.5 2.6 3.0 11.4 -2.1 5.0 1.0 1.0 1.5 1.5 2.5
Intellectual Property Products 4.8 9.7 8.8 4.8 4.3 4.5 10.8 8.9 8.0 4.0 4.0 4.0 4.0 4.0
Federal Government 6.2 2.3 -3.9 -1.6 -0.1 0.0 -5.3 -3.4 -3.0 -3.0 -1.0 -1.0 0.0 0.0
State & Local Government 0.4 -0.5 0.3 1.0 1.0 1.0 -0.4 -0.6 1.4 1.0 1.0 1.0 1.0 1.0
Net Exports ($bn, '12) -923 -1,233 -1,359 -1,261 -1,307 -1,326 -1,489 -1,431 -1,276 -1,240 -1,240 -1,254 -1,265 -1,286
Inventory Investment ($bn, '12) -55 -19 116 75 66 60 215 110 66 75 75 75 75 75
Industrial Production, Mfg. -6.3 5.7 4.0 1.9 2.6 3.2 3.6 3.6 3.5 1.6 1.1 1.5 1.9 2.2

HOUSING MARKET
Housing Starts (units, thous) 1,395 1,605 1,629 1,570 -- -- 1,720 1,647 1,520 1,627 1,570 1,570 1,570 1,570
New Home Sales (units, thous) 831 769 598 550 722 786 776 612 504 500 497 529 559 613
Existing Home Sales (units, thous) 5,638 6,127 5,072 4,358 4,711 4,983 6,057 5,373 4,619 4,240 4,274 4,319 4,386 4,454
Case-Shiller Home Prices (%yoy)* 9.5 18.8 7.0 -4.8 0.3 3.8 20.0 19.6 12.7 7.0 -0.8 -5.2 -5.7 -4.8

INFLATION (% ch, yr/yr)

Consumer Price Index (CPI)** 1.3 7.1 6.4 2.8 2.5 2.5 8.0 8.6 8.3 6.9 5.4 3.5 2.6 2.7
Core CPI ** 1.6 5.5 6.0 2.9 2.6 2.5 6.3 6.0 6.2 6.2 5.6 4.7 3.8 3.1
Core PCE** † 1.5 5.0 4.5 2.7 2.4 2.2 5.3 5.0 4.9 4.7 4.1 3.6 3.2 2.8

LABOR MARKET
Unemployment Rate (%)^ 6.7 3.9 3.6 4.1 4.2 4.2 3.6 3.6 3.5 3.6 3.7 3.8 3.9 4.1
U6 Underemployment Rate (%)^ 11.7 7.3 6.9 7.7 7.9 7.9 7.0 6.6 6.7 6.9 7.1 7.3 7.5 7.7
Payrolls (thous, monthly rate) -774 562 347 29 50 50 539 349 372 130 40 25 25 25
Employment-Population Ratio (%)^ 57.4 59.5 60.1 59.7 59.5 59.2 60.1 59.9 60.1 60.1 60.0 59.9 59.8 59.7
Labor Force Participation Rate (%)^ 61.5 61.9 62.3 62.2 62.0 61.8 62.4 62.2 62.3 62.3 62.3 62.3 62.3 62.2
Average Hourly Earnings (%yoy) 4.9 4.2 5.1 4.2 3.7 3.3 5.4 5.3 5.1 4.7 4.4 4.3 4.1 4.0

GOVERNMENT FINANCE
Federal Budget (FY, $bn) -3,132 -2,772 -850 -1,100 -1,200 -1,400 -- -- -- -- -- -- -- --

FINANCIAL INDICATORS
FF Target Range (Bottom-Top, %)^ 0-0.25 0-0.25 4.25-4.5 4.5-4.75 3.75-4 3.25-3.5 0.25-0.5 1.5-1.75 3-3.25 4.25-4.5 4.5-4.75 4.5-4.75 4.5-4.75 4.5-4.75
10-Year Treasury Note^ 0.93 1.52 3.75 4.00 3.75 3.65 2.32 2.98 3.83 3.75 3.90 4.00 4.00 4.00
Euro (€/$)^ 1.22 1.13 0.97 1.05 1.10 1.10 1.11 1.05 0.98 0.97 0.97 1.00 1.04 1.05
Yen ($/¥)^ 103 115 145 125 115 115 121 136 145 145 138 132 127 125
* Weighted average of metro-level HPIs for 381 metro cities where the weights are dollar values of housing stock reported in the American Community Survey. Annual numbers are Q4/Q4.
** Annual inflation numbers are December year-on-year values. Quarterly values are Q4/Q4.
† PCE = Personal consumption expenditures. ^ Denotes end of period.
Note: Published figures in bold.
Source: Goldman Sachs Global Investment Research.

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 Disclosure Appendix
October 1, 2022

Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure
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39
 Disclosure Appendix

Reg AC
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Global Investment Research 40

 Disclosure Appendix

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Global Investment Research 41