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Canada, U.K. Should Fear This Indicator Flashing Red, Goldman Says

  • Private-sector balance is underappreciated, Goldman says
  • Gauge shows more power to predict crises than current account

One under-appreciated indicator is flashing red for some developed markets, Goldman Sachs analysts say.

The private-sector financial balance -- an economy’s total income minus the spending of all households and businesses -- has proven more powerful in predicting crises than the current-account balance, Goldman analysts led by Jan Hatzius, the bank’s global head of economics, wrote in an Aug. 23 research note.