Any drag on spending from lower cryptocurrency prices ‘very small,’ says Goldman

Goldman Sachs chief economist Jan Hatzius said in a note to investors that his “rough estimate” is that U.S. households own about one-third of the global crypto market and the recent decline for major cryptocurrencies, which have fallen in value from $2.3T late last year to $1.3T now, is “very small” relative to U.S. household net worth, so he expects any drag on aggregate spending from the recent declines to be “very small as well.” Hatzius added that he sees “very limited scope” for an increase in labor force participation due to crypto price declines, because crypto holdings are such a small share of household wealth and because the labor force participation rate of younger men has already fully recovered to its pre-pandemic level. Though Hatzius thinks declines in household wealth may incentivize some workers that left the labor market during the pandemic to return, he argues that any incremental impact from the recent declines in cryptocurrency prices will “likely be modest.”

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