The Federal Reserve Won't Cut Rates In 2023 Because There Won't Be A Recession, Says Goldman Sachs Chief Economist

Goldman Sachs Group Inc (NYSE: GS) doesn't expect the Federal Reserve to lower rates anytime soon due to expectations for a healthier economy than most anticipate. 

"We're not looking for cuts because we're not looking for a recession," Goldman Sachs chief economist Jan Hatzius said Wednesday on CNBC's "Squawk On The Street."

What To Know: A new survey showed there were several people who currently held divergent views on the future standing of the global economy.

According to the Teneo study, 73% of executives expected macroeconomic conditions to worsen in the first half of 2023, while 76% of investors expected conditions to improve.

Check This Out: Will 2023 Be A Good Year For The Global Economy? Investors And CEOs Disagree On Outlook

The survey didn't poll economists, but Hatzius appeared to be siding with investors. 

"Our baseline is that the economy continues to grow and the adjustment process in the labor market continues, but without a recession," Hatzius told CNBC.

On the other hand, the consensus view was there would be a recession next year, he said. Whether or not a recession occurs would make a big difference in Fed policy, he added. 

The SPDR S&P 500 ETF Trust (ARCA: SPY) had been trending lower since the start of the year as the Fed continued its aggressive response to historic inflation levels. 

Related Link: Billionaire David Tepper Is 'Leaning Short' As Central Banks Hike Interest Rates: Why He Says 'Don't Ignore' The Signs

Goldman placed a 35% probability on the potential for the U.S. to tip into recession over the next year, while median forecasts were closer to 65%, Hatzius said.

He highlighted two reasons supporting his view. First, real household disposable income was now growing, which was a sharp reversal from early 2022, he said. 

Second, there was a sizable drag from tighter financial conditions and tighter monetary policy, but "we think the lags are actually relatively short," Hatzius said. 

"As I look forward into 2023, even with additional hikes ... I think the drag from financial conditions will be smaller."

SPY Price Action: The SPY is down 2.78% at $375.41 Thursday afternoon, according to Benzinga Pro.

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Photo: Predrag Kezic from Pixabay.