The likelihood of a U.S. recession in the next 12 months has receded, Goldman Sachs said.
The bank cut the chance of a recession from 25 percent to 20 percent and said recent data reinforced its belief that “it will not take a recession to bring inflation down to acceptable levels.” That’s below the median probability of 54% in the last Wall Street Journal survey and just above the postwar average of 15%.
Boss…
The likelihood of a U.S. recession in the next 12 months has receded, Goldman Sachs reported.
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The bank cut the chance of a recession from 25 percent to 20 percent and said recent data reinforced its belief that “it will not take a recession to bring inflation down to acceptable levels.” That’s below the median probability of 54% in the last Wall Street Journal survey and just above the postwar average of 15%.
Chief Economist Jan Hatsius said in a note on Monday that US economic activity was “resilient”, with second-quarter GDP growth at 2.3%, renewed growth in consumer sentiment, and the unemployment rate slightly down in June. A rise in jobless claims in recent weeks has signaled a reversal.
Goldman (ticker: GS ) expects a slight slowdown in the economy over the next two quarters due to lower personal income growth, but cited several reasons for maintaining growth. “Easing financial conditions, the rebuilding of the housing market and the uptick in factory construction suggest that the U.S. economy will continue to grow, albeit below trend,” Hatsius said.
Write to Callum Keown at callum.keown@barrons.com
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