Economists at Goldman Sachs have revised their forecast, indicating a higher likelihood of the U.S. economy slipping into a recession within the next 12 months.
The revised forecast came after a recent report demonstrating signs of a weakening job market. Goldman Sachs now estimates a 25% probability of an economic downturn, up from their previous projection of 15%.
Despite the increased risk, the economists emphasize that while the data reveals some concerns, overall, the economic landscape remains sound, with no significant financial imbalances detected.
Goldman Sachs analysts have adjusted their expectations for forthcoming rate cuts, anticipating a decrease of 0.25 percentage points post each of the Fed’s meetings in September, November, and December, contrary to their earlier estimation of rate cuts occurring quarterly.
Citing the current interest rate level as unjustifiably high, experts at Goldman Sachs suggest that immediate rate cuts are imperative to bolster the economy, with the Fed potentially lagging and the need to prioritize economic support becoming more urgent.
A notable rise in the U.S. unemployment rate from 4.1% to 4.3% in July, coupled with a modest addition of 114,000 jobs, the slowest since late 2020 excluding April, underpins the concerns driving the heightened recession likelihood as assessed by Goldman Sachs.
