Goldman Sachs: After Iran Conflict, US Economy Faces Lower Growth, Higher Inflation, and Long-term Oil Prices; Stock Market Valuations Adjusted but More Favorable for Tech Assets
Goldman Sachs' research team stated that compared to pre-war periods, the US economic outlook has shifted towards lower growth, higher inflation, higher long-term oil prices, and slightly higher policy rates in the short term. The rise in earnings expectations has reduced US stock valuations, weakening support for cyclical sectors, but is more favorable for tech sectors, leaning towards assets that are on the advantageous side of trade condition shocks.
This assessment stems from the Middle East conflict causing disruptions in oil transportation through the Strait of Hormuz, leading to significant short-term oil price volatility. Goldman Sachs has thus raised its inflation forecasts, lowered GDP growth expectations, and increased the 12-month recession probability from previous levels to 30%. Although a slow growth scenario remains the baseline, it emphasizes the stagflationary pressures brought about by oil price shocks.
Source: Public Information
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Goldman Sachs' adjustments reveal how geopolitical conflicts reshape macro incentive structures through energy channels. Rising oil prices constitute a typical trade condition shock, creating negative supply shocks for net importers: raising production and consumption costs while squeezing real incomes and corporate profit margins. This forces policy rates to remain elevated in the short term to anchor inflation expectations, yet limits the space for traditional cyclical recovery, reflecting the amplifying effect of external supply constraints on domestic demand management.
From a longer-term perspective, such shocks accelerate the reallocation of capital at the industrial level. The upward shift in earnings expectations accompanied by declining valuations indicates that the market has partially digested the slowdown in growth, but the tech sector benefits relatively due to its lower energy intensity and higher pricing power. This differentiation reflects the role of technological substitution mechanisms: digital-intensive industries maintain or enhance productivity in an environment of rising energy costs, while traditional energy-intensive or cyclical sectors face higher adjustment costs. This is not merely a short-term fluctuation but a slow migration of power and capital towards high-tech, high-barrier fields within the global financial structure.
Overall, Goldman Sachs' outlook highlights the adaptive challenges faced by the US economy under institutional constraints. The increased probability of recession, though still not the baseline scenario, shows that the resilience of the private sector and fiscal buffers are still at play; however, the long-term upward trend in oil prices and inflation stickiness will continue to affect wealth distribution, testing the Federal Reserve's ability to balance between supply shocks and demand management, and reinforcing the weight of global energy transition and geopolitical risk pricing in capital allocation.