Goldman cuts US recession forecast

In the US, Treasury Secretary Janet Yellen reiterated that she does not expect a recession in the country, while Wall Street banks are also lowering their recession expectations. Goldman Sachs lowered its expectation for the probability of a recession in the US for next year to 20 percent. According to Goldman Sachs Chief Economist Jan Hatzius, the US economy has a better chance of avoiding a recession in the next 12 months following recent positive data on economic activity and inflation. “We are lowering the probability of a recession in the US in the next 12 months from 25 percent to 20 percent. The main reason for the revision in our expectation is that we believe a recession is not necessary to bring inflation to a reasonable level,” Hatzius said in a report published on Monday. He stated that there are “strong fundamental reasons” to expect a continued easing in inflationary pressures after core inflation in the US reached its lowest level since 2021 last month. Hatzius said the Fed is set to raise interest rates again next week, likely the latest in a series of tightening measures that began last year. “We expect some slowdown over the next few quarters, particularly when adjusted for the resumption of student debt payments in October, as real disposable personal income growth slows and bank lending declines. However, the easing of financial conditions, the recovery in the housing market and the ongoing boom in factory construction suggest that the U.S. economy will continue to grow, albeit at a below-trend pace,” Hatzius said.