Goldman Sachs Warns: Stock Market Correction Poses Biggest Risk to US Economy

• Goldman Sachs identifies a stock market correction as the most significant near-term risk to the U.S. economy.
• Economist Pierfrancesco Mei forecasts 2.5% GDP growth for 2026 but warns a 10% market pullback could reduce it by 0.5 percentage points.
• A 20% stock drawdown could nearly halve the projected GDP growth, significantly impacting economic expansion.
• The primary concern is the 'wealth effect,' where falling asset values reduce consumer spending, especially among higher-income households.
• The U.S. economy already faces 'K-shaped' pressures, with high earners spending while low-income groups struggle, making a correction more impactful.