- Goldman Sachs has lowered the probability of the U.S. economy slipping into a recession within the next 12 months to 20% from a previous 25%.
- This adjustment is based on recent positive economic data, particularly from the labor market and retail sales.
- The number of new unemployment claims fell by 7,000 to 227,000 for the week ending August 10, against expectations of a slight increase.
- Retail sales in July saw a month-on-month increase of 1%, the highest in 1.5 years, surpassing economists’ forecasts of a 0.3% rise.
- Jan Hatzius, Goldman Sachs’ Chief Economist for the U.S. market, noted that if August labor market data is “relatively good,” the recession probability might be further reduced to 15%.
New York, August 19 (FFN) – Goldman Sachs has reduced the likelihood of the U.S. economy entering a recession within the next 12 months, citing favorable economic indicators. The investment bank now estimates a 20% chance of recession, down from 25%, according to Reuters.
This revision was driven primarily by stronger-than-expected data from the U.S. labor market and retail sales. Specifically, the number of new unemployment claims decreased by 7,000 to 227,000 for the week ending August 10, defying economists’ expectations of a slight rise. Additionally, retail sales in July grew by 1% from the previous month, marking the highest increase in 1.5 years and far exceeding the predicted 0.3% growth.
“Based on the July and early August data, which do not suggest an imminent recession risk, we have lowered the recession probability from 25% to 20%,” said Jan Hatzius, Goldman Sachs’ Chief Economist for the U.S. market. Earlier in August, the bank had increased the recession risk from 15% to 25% following an unexpected rise in the unemployment rate from 4.1% to 4.3%, the highest in three years. Hatzius added that if the upcoming August labor market data is “relatively good,” Goldman Sachs may further reduce the recession probability to 15%.
Economic Indicators Affecting Recession Probability
| Metric | Details |
|---|---|
| Recession Probability (Next 12 Months) | Reduced to 20% |
| New Unemployment Claims (August 10, 2024) | 227,000 (decreased by 7,000) |
| July Retail Sales Growth | 1% (highest in 1.5 years) |
| Unemployment Rate (July 2024) | 4.3% (highest in three years) |
| Potential Further Reduction | To 15% if August labor data is favorable |
