On May 15, Goldman Sachs economists, led by Jan Hatzius, lowered their U.S. economic growth forecasts due to expectations of the Fed’s aggressive interest rate hikes to bring down the inflationary pressures. They now expect the country’s GDP to grow 2.4% in 2022 and 1.6% in 2023, lower than the earlier forecasts of 2.6% and 2.2%, respectively. Furthermore, Goldman Sachs Senior Chairman Lloyd Blankfein warns companies and consumers of the high recession risk.
Amid the growing possibility of the U.S. economy sliding into recession, it could be wise to invest in defensive ETFs. These ETFs invest in companies operating in recession-resistant sectors, including consumer staples, consumer discretionary, energy, healthcare, education, utilities, and defense. Given an inelastic demand for the products and services, specific sectors tend to perform relatively well in a weak economy.
