Goldman Sachs Lowers Odds of a U.S. Recession Next Year

Goldman Sachs lowered the chance of a recession in the United States occurring within the next 12 months from 25% to 20%, driven by a slew of better-than-expected economic data.

“The main reason for our cut is that the recent data have reinforced our confidence that bringing inflation down to an acceptable level will not require a recession,” said Goldman Sachs’s chief economist chief Jan Hatzius.

The investment bank pointed to robust economic activity in the US, estimating that GDP growth for the second quarter would come in at 2.3%. Goldman is feeling upbeat since consumer sentiment is on the upswing and the jobless rate dropped to 3.6% in June.

In the first quarter, the U.S. economy grew 2% annually. Meanwhile, the Labor Department reported that initial unemployment claims fell to 239,000 for the week ending June 24, 26,000 below estimates of 264,000.

In addition, core inflation rose in June at its weakest level since February 2021 suggests “strong fundamental reasons” to believe that price increases for consumers will continue to moderate.

Goldman, however, forecasts a slowdown in growth in the coming quarters as a result of successively slower expansion of real disposable personal income.