Global investment bank Goldman Sachs has increased the likelihood of a U.S. recession within the next year to 25% from the previous 15%, although they maintain that the risk remains limited. Despite the recent rise in unemployment to its highest in nearly three years and a significant slowdown in hiring, Goldman economists, led by Jan Hatzius, believe the overall economic outlook is stable. They cite the absence of major financial imbalances and the Federal Reserve’s capacity to swiftly cut interest rates if necessary. Goldman’s projections suggest a series of 25 basis point cuts by the Fed in September, November, and December, contrasting with JPMorgan and Citigroup’s more aggressive forecasts of a 50 basis point cut in September. They argue that unless August job growth is as weak as July’s, a 50 basis point cut is unlikely. Furthermore, Goldman does not foresee rapid labor market deterioration due to strong job demand and no significant economic shocks.

Source : Bitcoin.com - Aug 5, 2024