Goldman Sachs has recently announced that the likelihood of a U.S. recession in the next 12 months has decreased, thanks to encouraging economic data. The bank has revised its recession odds from 25% to 20%, stating that recent data have reinforced their belief that a recession will not be necessary to bring inflation under control. This 20% probability is lower than the median probability of 54% indicated in the latest Wall Street Journal survey, and only slightly higher than the post-war average of 15%.
In a note on Monday, Chief Economist Jan Hatzius highlighted the resilience of U.S. economic activity. Second-quarter GDP growth is estimated to be tracking at 2.3%, consumer sentiment has rebounded, and there has been a slight decrease in the unemployment rate in June. Hatzius also pointed out that the recent surge in jobless claims has started to reverse in recent weeks.
While Goldman expects some deceleration in the economy over the next two quarters due to slower personal income growth, they still have several reasons to anticipate overall growth. The easing of financial conditions, a rebound in the housing market, and the continued expansion of the manufacturing sector all suggest that the U.S. economy will persist in growing, albeit at a pace below its trend.
Overall, this news from Goldman Sachs provides some reassurance about the current state of the U.S. economy and its outlook for the next year.