Goldman Sachs Economists Lower U.S. Recession Probability to 20% - What Does This Mean for Your Investments?
Goldman Sachs economists have revised their 12-month U.S. recession probability down from 25% to 20%, citing recent economic data that shows no signs of a downturn. This news comes after the July jobs report triggered the “Sahm rule,” causing the Wall Street giant to increase its recession estimates from 15% to 25%.
However, recent economic indicators have prompted a reassessment. The nonmanufacturing ISM index for July rebounded, retail sales beat expectations, and initial jobless claims have declined. This positive news suggests strong real consumption growth and a healthier economy.
Looking ahead, Goldman Sachs economists indicate that if the August jobs report shows positive signs, they may lower their recession probability back to 15%. On the monetary policy front, economists are more confident in their forecast of a 25-basis-point rate cut at the September 17-18 FOMC meeting, but they do not rule out the possibility of a 50-basis-point cut if the jobs report disappoints again.
In summary, the recent data is indicating a more positive outlook for the U.S. economy, with a lower probability of recession and potential rate cuts to stimulate growth. As an investor, it's important to stay informed about these developments and adjust your portfolio accordingly.