Goldman Sachs lowers its forecast for US economic recession to 20% based on strong retail and employment data
Goldman Sachs economists, after analyzing last week's retail and unemployment data, have lowered the probability of a US economic recession in the next year from 25% to 20%. They pointed out that if the September 6 employment report performs well, the probability may be further reduced to 15%. Retail sales in July saw the largest increase since 2023, and the number of unemployment benefit applicants has dropped to a record low. In addition, Goldman Sachs is more confident in the Federal Reserve cutting interest rates by 25 basis points in September, despite the risk of unexpected downturns. Overall, the current economic data supports stable growth in the US economy
According to the latest information from the Smart Finance app, economists at Goldman Sachs have adjusted their forecast for the possibility of the U.S. economy falling into a recession in the next year from 25% to 20% after reviewing the retail sales and unemployment claims data released last week. This optimistic forecast is based on recent positive economic indicators that demonstrate the resilience of the U.S. economy.
In a client report released last Saturday, Goldman Sachs' Chief Economist Jan Hatzius and his team further pointed out that if the August employment report, to be released on September 6th, performs well, they may further reduce the likelihood of an economic recession to 15%. This expected probability level has remained stable for nearly a year and may undergo further adjustments on August 2nd.
After experiencing a significant decline recently, the U.S. stock market has seen its best performance so far this year, thanks to a series of positive economic data. Retail sales in July recorded the largest increase since early 2023, and government data revealed that the number of initial jobless claims last week dropped to the lowest level since early July.
Furthermore, Goldman Sachs economists have expressed increased confidence in the Federal Reserve cutting interest rates by 25 basis points at the September policy meeting. They noted that despite the possibility of a surprise decline in the September 6th employment data, which could trigger a larger 50 basis points rate cut, a 25 basis points rate cut seems to be the more likely outcome at present.
Overall, Goldman Sachs' analysis indicates that despite some uncertainties in the economy, the current economic data and expected monetary policy adjustments provide support for stable growth in the U.S. economy. These positive signals have boosted confidence among investors and injected vitality into the market