Is US Out of Recession Risk? Insights from Goldman Sachs
The Recession Probability Decreases
Goldman Sachs has significantly cut the probability of the United States entering a recession within the next year, down from 20% to 15%. This decision follows the Labor Department's report, showcasing the biggest job gains for September in six months.
Positive Labor Market Report
- The unemployment rate has dipped to 4.1%.
- Goldman Sachs chief US economist Jan Hatzius stated that this report has effectively reset the labor market narrative.
- There is heightened optimism surrounding economic resilience.
Future Rate Expectations
Despite the positive trajectory in job numbers, Goldman Sachs remains cautious, noting the volatility in these figures and the absence of continued negative adjustments. They anticipate two consecutive 25 basis point cuts by June next year, aiming for a terminal rate between 3.25% and 3.5%.
Market Reactions and Challenges Ahead
- Following the Federal Reserve's first rate cut of 50 basis points since 2020 in September, financial markets have raised their expectation of a quarter-percent cut in November to 95.2%.
- Goldman Sachs warns of potential challenges in October due to a hurricane and a major strike affecting payroll numbers.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.