- Plus: Green shoots in the IPO market #
# --------------------------------------------------------------- The key takeaways today: - As job openings drop, the U.S. may avoid recession
- Changes in U.K. immigration may be increasing inflation
- Cutting the gender employment gap could boost global GDP
Was this newsletter forwarded to you? ([Sign up now.]( --------------------------------------------------------------- The U.S. economy may stick a soft landing While fears over recession are still looming large in the U.S., there are encouraging signs that the U.S. economy can achieve a soft landing without a sharp increase in unemployment, according to Goldman Sachs Research, which recently lowered its 12-month [recession probability to 25%](. In the latest episode of [Goldman Sachs Exchanges]( David Mericle, our chief U.S. economist, points to a rebalancing of the labor market as a key factor behind his optimism. A large decline in the jobs-workers gap total labor demand minus total labor supply to about 3 million from 6 million has been remarkably painless and achieved without an increase in the unemployment rate, Mericle says. Instead, we've seen a big decline in job openings and a big recovery of labor supply do all of the work. And while inflation levels are still high, wage growth appears to be softening, supply chain problems are easing, leading indicators of rent inflation have fallen sharply and inflation psychology is normalizing. --------------------------------------------------------------- Is the best ahead for Indian equities? Over the past two decades, India has seen its economy grow seven-fold. During these boom times, Indian equities have delivered substantial returns, with standout performance seen on both an index and single-stock level. Sunil Koul of Goldman Sachs Research examined the proportion of stocks in various markets that have generated 10-bagger returns meaning they've delivered at least 10x total returns in their local currency over a given five-year rolling period since 2000. Within India's NSE 500 index, more than half of the stocks are 10-baggers, Koul found. That's the highest such proportion across a series of major markets. Koul believes that the best is yet to come, given that three significant drivers for the Indian economy remain in place: favorable demographics, ongoing reforms and increasing digitization. In our view, the Indian equity market is still full of potential 10-baggers, Koul concludes. Watch our [video]( to learn more. --------------------------------------------------------------- Have changes in U.K. immigration increased inflation? As the U.K. contends with one of the highest inflation rates among advanced economies, there are signs that a drop in immigration by EU workers since Brexit has contributed to an overheated job market and higher inflation, according to Goldman Sachs Research.
[Overall immigration to the U.K. has actually increased since the Brexit referendum]( but the composition of migration has changed, Goldman Sachs economists James Moberly and Sven Jari Stehn write in the team's report. The post-Brexit migration regime introduced in 2021 has shifted from one that allowed free movement for EU workers to one that is based on skills instead of geography. Immigration from the EU has dropped off sharply, while inflows from outside the EU have risen. At the same time, the main reason for immigration has shifted from people looking for work in the U.K. toward humanitarian reasons and education. The sectors that used to have the highest inflow of EU workers have also had the largest rise in vacancy rates and the greatest increase in the jobs-workers gap the difference between the total number of jobs (employment plus job openings) and the total number of workers. In addition, as migration rules and patterns have changed, the supply of workers in the U.K. hasn't increased as much as it has in Canada and the euro area, Moberly and Stehn write. They expect core inflation in the U.K. to stay above other advanced economies. --------------------------------------------------------------- Cutting the gender employment gap in half could boost global GDP by 5-6% Goldman Sachs Research finds there's been progress over the past 15 years in women's education and participation in the job market. But even so, gender gaps in pay and employment persist, and these inequities threaten to hold back many economies that are beset by a shrinking working age population. Even just halving the current pay and employment gap between men and women could raise the level of GDP across developed and emerging markets by 5% to 6%, senior portfolio strategist Sharon Bell and emerging market strategist Sara Grut [write in the team's report](. Closing those gaps completely could generate a 10% GDP boost for developed-market economies and a 13% lift for emerging markets, they find. Looking at these issues afresh, we find that shrinking working age populations mean that it is now more important than ever to utilize the full resources women have to offer (and to reward them fully), Bell and Grut write. --------------------------------------------------------------- The Markets: Signs of green shoots for IPOs? Stock markets have rallied in many parts of the globe this year, and the world's largest economy is still showing signs of solid growth. Does that mean the IPO market is ready for a comeback? We spoke with Elizabeth Reed, global head of our equity capital markets syndicate desk, about her views in this week's Markets podcast. Start your Friday mornings with our new podcast, [The Markets from Goldman Sachs Exchanges](. In just 10 minutes or less, we break down the key issues moving markets. Find us wherever you listen to podcasts. --------------------------------------------------------------- Europe's green energy transition is gaining momentum While Europe has long had an agenda for green energy, Alberto Gandolfi, head of the European Utilities Research team, says the region's energy crisis and policy changes in the U.S. have helped galvanize those efforts. What's more, he says executives at our Electrify Europe utilities conference, held late May in London, were very much in agreement that [returns on clean energy projects are rising](. Europe is on the verge of a clean energy revolution. The region is making strides in several areas: streamlining bureaucracy, accelerating the development of renewable energy, improving the resilience of power grids and planting the seeds for the development of a domestic supply chain, Gandolfi says. All these moves are leading to a European IRA, the continent's version of the U.S. Inflation Reduction Act, which could lead to as much as €4 trillion in capital investments in Europe over the next decade. Germany is leading the way. Europe's largest economy is acting quickly, reducing approval times for renewable projects, developing its local supply chain, subsidizing less expensive electricity to energy intensive users and rebuilding the power grid, Gandolfi says. In all, Germany has a very ambitious renewable plan about €250 billion over roughly 10 years which could serve as a template for the rest of Europe. Renewable energy project returns are growing. Most of the C-suite executives at the conference said returns of clean energy projects are going up. Returns used to be in a range of 6% to 6.5% but now are closer to 8%. Eight is the new six, Alberto says, noting that the management teams say they have good visibility on sustaining those returns for at least the next 18 months. --------------------------------------------------------------- Briefings Brainteaser: Which country has the smallest gender pay gap? While the pay gap between men and women remains wide, it has narrowed in a number of economies over the past 15 years. Which of these countries has smallest gender pay gap? A) New Zealand
B) Germany
C) Colombia
D) South Korea
[Check the answer here.]( --------------------------------------------------------------- Goldman Sachs in the news [Music Ally]( June 29
[Goldman Sachs updates its music industry revenue forecasts]( [CNBC]( June 28
[Inflation, interest rates likely to be stickier than markets are pricing, says Goldman's Oppenheimer (4:38)]( [WealthManagement.com]( June 23
[Family offices are investing in innovation and the next generation]( ---------------------------------------------------------------
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