(Yahoo! Finance) - An economic warning from a former Trump administration insider: "[Higher gas prices are] absolutely recessionary in the short term," Gary Cohn told me on Yahoo Finance's Opening Bid.
"There's nothing more instantaneous to a consumer than standing there holding down the gas nozzle and watching the numbers tick on the pump ... And if they were paying $80 a week ago, and they're paying $85 this week and they were paying $60 a month ago, they know that 'I lost $20 of disposable income in filling up this tank of gas,'" added Cohn.
"If you're filling up four times a week, that's $80 of disposable income coming out of your pocket after tax, disposable income. That's the difference between taking your family out to dinner and not taking your family out to dinner a couple times in a week."
Cohn spent over 25 years at Goldman Sachs, beginning as a commodities trader and eventually serving as the firm’s president and COO for a decade.
In 2017, Cohn joined the first Trump administration as the Director of the National Economic Council (NEC). As the president’s chief economic adviser, he was a primary architect of the Tax Cuts and Jobs Act of 2017, a landmark legislation that fundamentally restructured the US corporate tax code.
After leaving the White House in 2018, Cohn returned to the private sector and currently serves as the vice chairman of IBM.
"I think right now ... we're more in a stagflationary environment. We don't have growth, but we have prices increasing," said Cohn.
His cautious view on the economy adds to the growing concerns on Wall Street about where markets and the economy are headed if the war in Iran persists.
JPMorgan strategists slashed their 2026 year-end S&P 500 target today to 7,200 from 7,600, citing rising geopolitical uncertainty.
Goldman Sachs warned markets are on the cusp of a correction, defined as 10% drop from the highs. The S&P 500 is off by about 4% from its highs.
"Equity correction risk remains elevated in the near term, but we continue to think bear market risk remains limited. While geopolitical shocks and their market impact are difficult to time, we think equities have not priced in enough risk premium for the risk of a more lasting shock — based on the disruptions so far our economists have already reflected a worsening growth/inflation mix and raised their recession probability," Goldman's strategists said.
By Brian Sozzi - Executive Editor
