Chances of a US recession next year reduced to 20% by Goldman

The U.S. economy has a better chance of avoiding a recession over the next 12 months following recent positive data on economic activity and inflation, according to Jan Hatzius, chief economist at Goldman Sachs Group Inc.

“We are reducing our likelihood of a US recession starting in the next 12 months by 25% to 20%,” Hatzius wrote in a report released Monday. “The main reason for our decline is that recent data has bolstered our confidence that bringing inflation back to an acceptable level will not require a recession.”

Hatzius cited “strong fundamental reasons” for expecting a continued easing of inflationary pressures after a July 12 Bureau of Labor Statistics report showed Core inflation excluding food and energy in the United States slowed last month to the slowest pace since 2021.

Moreover, with the Federal Reserve set to raise its benchmark interest rate again next week, it will likely be the latest in a series of hikes that began last year, he said. he declares.

“We expect some deceleration over the next two quarters, primarily due to sequentially slower growth in real personal disposable income – especially when adjusted for the resumption of student debt payments in October – and a curb on the reduction of bank lending,” Hatzius wrote.

“But the easing of financial conditions, the rebound in the housing market and the continued boom in factory construction all suggest that the US economy will continue to grow, albeit at a below-trend pace.”