It was less than a month ago when bank after bank triumphantly revealed their extremely optimistic year-ahead growth forecasts, in which chief economists trumpeted 2022 GDP expectations in the mid- to high-single digits despite knowing well that these numbers are completely unattainable (as a reminder, the reason the forward swap yield curve just inverted is because even the market now understands that Powell is hiking into an imminent recession). An example of this is the following Nov 8 blurb from Goldman’s Jan Hatzius:
Although the fastest pace of recovery now lies behind us, we expect strong global growth in coming quarters, thanks to continued medical improvements, a consumption boost from pent-up saving, and inventory rebuilding. For 2022 as a whole, global GDP is likely to rise 4½%, more than 1pp above potential.
At the time we made the decision to simply ignore these forecasts which came just as speculation was emerging of a new covid variant, and which we – correctly – predicted would lead to imminent outlook cuts.