Goldman Sachs Predicts Sluggish S&P 500 Growth Over Next Decade, Warns of Lower Returns

Goldman Sachs (NYSE:GS) forecasts that over the next decade the S&P 500 will yield an annualized return of 3%, significantly lower than 13% yearly return over the past ten years. David Kostin, Goldman's Chief U.S. Equity Strategist, offered this view in a note on Thursday, which is noticeably below the general market consensus of 6%.

Indicating a marked slowdown in growth, the 3% return forecast places future returns in the 7th percentile for 10-year returns since 1930. Emphasizing the unpredictability in future market performance, Kostin's team pointed out that the forecast range includes a probable 7% gain at the high end and a 1% fall at the low end. This estimate further emphasizes the difference from the 11% long-term average return of the stock market.

Maintaining a 95% confidence band around the projection, the strategists explained their conservative approach as the result of certain market conditions. They also underlined the importance of the robust 13% annualized return of the stock market during the past ten years, which surpassed preceding norms. Goldman's forecast points possible difficulties for anyone seeking large returns in the upcoming years.