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Financial imbalances, including those in credit markets and cryptocurrencies, will shadow an otherwise robust 2018 US economy, said Goldman Sachs Group Inc. economist Jan Hatzius. Hatzius has already made some predictions for the new year: four Federal Reserve rate hikes, real US gross-domestic product growth quickening to an average of 2.6 per cent, the jobless rate dropping to about 3.5 per cent, and the yield curve not inverting.
In a new report, Hatzius reiterated his expectation for overall economic strength, while flagging some concerns.“Asset valuations in some areas — especially credit — have risen to high levels by historical standards,” Hatzius said in the “10 Questions for 2018” report issued late on Friday. “While we have not seen the type of large credit expansions that would be most worrisome for Fed officials concerned about financial imbalances, there are now some signs of speculative behavior in financial markets, e.g. the cryptocurrency boom.” Goldman isn’t the only firm to send up a warning flag about cryptocurrencies. JPMorgan Chase & Company Chief Executive Officer Jamie Dimon labeled bitcoin a “fraud”. Fed Chair Janet Yellen has said it is a “highly speculative asset,” and Bank of Japan Governor Haruhiko Kuroda said it's being used for speculation.