Goldman Sachs: Chances of Recession Reduce

Goldman Sachs cut the probability of a US recession starting in the next 12 months to 15 percent yesterday, from its previous forecast of 20 percent.

In a note on the subject, Goldman Sachs chief economist Jan Hatzius wrote that inflation and labor market data reduce the likelihood of a recession.

The investment bank said it expects a rebound in real disposable income next year, thanks to continued strong job growth and rising real wages.

GOLDMAN ESTIMATE OF INTEREST

Hatzius said the Federal Reserve’s rate hike in September was “out of the question.” Goldman added that he expects gradual interest rate cuts of 25 basis points per quarter starting in the second quarter of 2024.

US consumer spending picked up in July, but slowing inflation reinforced expectations that the US Federal Reserve will not change interest rates at this month’s policy meeting.