Higher energy costs are starting to have an effect on the U.S. economy, Goldman Sachs Groupchief economist Jan Hatzius told CNBC Wednesday.
"I think we’re seeing some drag," Hatzius said. "We would say maybe a quarter to a half point [off gross domestic product] from the increase in oil and gas prices seen since December. There may be a very small offset from the lower natural gas prices, but we still think oil is more important."
Hatzius expects "moderate GDP growth" because of the very slow improvement in the labor market and the increase in the oil and gas prices.
"We think there’ll be some fiscal restraint. That’ll be more of a issue for 2013 than for 2012," Hatzius said.
For that reason "I still think the Federal Reserve is going to be very easy" with its monetary policy, Hatzius said. "It’s going to keep rates low for a very, very long time and it’s more likely than not they will engage in another round of quantitative easing . In a moderate-growth environment I still think they will want to give the recovery an extra push."
He is predicting Friday's nonfarm payroll number will show 200,000 jobs created in February and another decrease in the unemployment rate, to 8.2 percent from the current 8.3 percent.Page 1 of 2 | Next Page