Investment bank Goldman Sachs has once again revised its predictions on the likelihood of a recession hitting the United States within the next 12 months. This marks the third time since June that Goldman Sachs has adjusted its forecast.
The probability of a contraction now stands at 15%, down from 20% in July. Earlier this year, in March, the odds were placed at 35% due to turbulence in regional banks caused by market instability.
Goldman Chief Economist Jan Hatzius, while acknowledging a slowdown in the fourth quarter, remains optimistic that it will be “shallow and short-lived.” In a note published on Monday, Hatzius stated that economists surveyed by Bloomberg estimate a 60% chance of recession in the coming year as a result of a campaign of interest-rate increases that is impacting the economy.
Despite recent data showing an increase in unemployment, Hatzius is not concerned. The rise in the unemployment rate can be attributed to more individuals participating in the labor force. Moreover, the inflation index is currently being distorted. Hatzius believes underlying inflation may already be near the Federal Reserve’s target.
According to Hatzius, the United States is well positioned for a “soft landing.” He expresses increasing confidence that the Federal Reserve will not raise rates any further in the coming months.
However, this positive outlook for the economy may not necessarily translate to significant gains in the stock market. According to Goldman’s equity strategists, most of the benefits from a soft landing and an artificial intelligence boom have already been realized.
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