Goldman Sachs issued a statement of warning on Wednesday to investors amid the wave of economic uncertainty arising from the collapses of Silicon Valley Bank and Signature Bank. This development led Goldman Sachs chief economist Jan Hatzius to reduce his GDP forecast for 2023.
Hatzius slashed his forecast for ful-year GDP growth from 1.5% to 1.2%. “The macroeconomic impact of a pullback in lending will remain highly uncertain until the extent of the stress on the banking system becomes clear,” Hatzius wrote.
Silicon Valley Bank’s collapse last week Friday is the largest banking failure since the 2008 financial crisis. Furthermore, it is the second largest failure of a bank in U.S. history behind that of Washington Mutual during the Great Recession.
This failure is being followed by widespread uncertain surrounding Credit Suisse, with the bank’s largest shareholder, Saudi National Bank, refusing to provide further financial support. While they resorted to sending the bank’s executives out into the market to reestablish confidence, this tactic had a minimal effect.