A Q&A on Our Economic Forecasts Amid the Evolving War with Iran

Goldman Sachs

Jessica Rindels, David Mericle

Research

17 Pages

Goldman Sachs updates its US macro outlook around the Iran war and oil shock. It now sees higher inflation, slower growth, and a softer labor market, but still expects the Fed to cut twice this year rather than hike into the shock.

Key Takeaways

Inflation Reset Higher: Goldman raised its December 2026 headline PCE forecast by 1.0pp to 3.1% and core PCE by 0.3pp to 2.5% after the war began.
Growth Takes A Hit: Goldman cut 2026 Q4/Q4 GDP growth by 0.5pp to 2.0%, with consumption growth lowered to 1.2% as higher gasoline costs squeeze spending.
Fed Cuts Still Favored: Goldman still expects 25bp cuts in September and December 2026, even as unemployment is now projected to rise from 4.3% to 4.6%.
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