Goldman Sachs has adjusted its forecast for a U.S. recession, lowering the probability to 20% from a previous 25%.
This revision comes in response to positive signals from the latest jobless claims and retail sales data, which suggest the U.S. economy may be more resilient than previously thought.
Earlier this month, Goldman had increased its recession odds to 25%, up from 15%, after July’s unemployment rate rose to a three-year high, raising concerns about a potential downturn.
However, recent data has shifted the outlook.
In a note released Saturday, Goldman Sachs’ chief U.S. economist Jan Hatzius explained that the firm reduced the recession probability to 20% because “the data for July and early August shows no sign of recession.”
Hatzius also noted that this ongoing economic expansion could make the U.S. economy resemble other G10 economies, where the Sahm rule—a signal of recession—has been less reliable, holding less than 70% of the time.
Thursday’s jobless claims report provided additional reassurance, with filings for unemployment benefits dropping to a one-month low.
Meanwhile, retail sales in July saw their most significant increase in a year and a half, further boosting confidence in the economy’s strength.
Looking ahead, Hatzius suggested that if the August jobs report appears “reasonably good,” the recession probability might be reduced to 15%.
He also mentioned that the Federal Reserve is expected to cut interest rates by 25 basis points at its September meeting, though a 50 basis point cut could be considered if the jobs report is weaker than expected.
In the broader business landscape, Goldman Sachs’ revised outlook indicates that the U.S. might avoid a recession, supported by a resilient job market and robust consumer spending.
However, future data releases will continue to be closely monitored.
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