Global Economics Wrap Up

Economics Research 18 September 2026 | 2:55PM EDT

Global Economics Wrap-Up: September 18, 2026

Global Economics Joseph Briggs | 9/18/26 1:55PM ET Goldman Sachs & Co. LLC

n Is poor economic sentiment really about the economy? Andrew Tilton | o Consumer sentiment remains very weak across major economies despite Goldman Sachs (Asia) L.L.C.

healthy labor markets, a booming stock market, and solid consumer Katya Vashkinskaya | spending and GDP growth. Goldman Sachs International § Cross-country relationships confirm that high price levels Jessica Rindels | post-pandemic are lowering sentiment, while amplified political Goldman Sachs & Co. LLC biases have also led to sharp shifts after recent global elections. Sarah Dong o One explanation is that people have generally become more downbeat on | Goldman Sachs & Co. LLC the state of the world for reasons unrelated to the economy, and overall happiness levels in the University of Chicago’s General Social Survey have yet to recover after deteriorating sharply in 2020. § We find that this lower happiness is strongly correlated with lower confidence in societal and government institutions post-pandemic. o This suggests that low reported economic sentiment likely reflects a more fundamental, downbeat assessment of the state of the world rather than the economy. n DM central bank meetings this week: o The FOMC unanimously raised the federal funds rate by 25bp and a clear majority of participants projected at least one more hike this year in the Summary of Economic Projections. o The BoE voted 6-3 to hold the Bank Rate but several members of the MPC signaled openness to future hikes. o The BOJ voted 7-2 to raise the policy rate by 25bp to 1.25%, as widely expected.

US Economics 9/18/26 9:53AM ET

n The FOMC raised the fed funds rate by 25bp to 3.75-4% at its meeting this week: o The meeting was more hawkish than we expected: § A 16-2 majority projected at least one more rate hike this year and

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Goldman Sachs Global Economics Wrap-Up

there were no dissenting votes against the hike. § The median fed funds rate projection remained quite elevated through 2029, and the median long-run projection rose from 3.06% in June to 3.25% this week. § Chairman Warsh described the hike as having “removed a dose of accommodation.” o We now expect the FOMC to deliver a second 25bp hike at the October meeting. § Additional hikes this year are possible but not our base case, partly because our forecast for core PCE inflation remains below the median FOMC participant’s forecast. n We boosted our Q3 GDP tracking estimate by 0.8pp this week to +3.3%: o Core retail sales increased 1.4% in August, partly reflecting a 0.5pp boost from the nonstore retailers category which was depressed in July by an earlier-than-usual Amazon Prime Day. o Single-family housing starts increased by 7.6% in August and the July growth rate was revised up. o The utilities component of the industrial production report, which is relevant for consumption growth, rose 1.8% in August. n Our financial conditions index is little changed this year despite the large rise in interest rates, implying little net impact on GDP growth. o Interest rates have risen substantially since the start of the year, but their impact on overall financial conditions has been roughly offset by tighter credit spreads, higher equity prices, and a weaker dollar. o As a result, the impulse from changes in financial conditions to GDP growth is little changed and quite small, contrary to what one would think from the rise in rates alone.

Europe Economics 9/18/26 12:11PM ET

n Latest UK data mixed: o Labour market numbers showed the unemployment rate remaining at 4.9% in July, in line with consensus. o But the payrolls figures were weaker than expected, with the July figures revised downwards and the August flash print showing a 26k contraction. o Private sector regular pay growth came in a tenth above consensus at 2.9% in July. o CPI data showed headline inflation rising to 3.1% in August…