Goldman downgrades US recession chances

Economists at Goldman Sachs said they now see the chance of a U.S. recession at 15%, up from 20% previously. Goldman Sachs now sees the chance of a U.S. recession at 15%, up from 20% previously, as cooling inflation and a still-resilient labor market suggest the Fed may not need to raise interest rates further. “First, real disposable income looks set to accelerate again in 2024, driven by continued solid employment growth and rising real wages. Second, we still strongly disagree with the notion that the increased drag from ‘long and variable lags’ of monetary policy will push the economy into a recession,” the economists said in a research note. The drag from policy tightening is seen as continuing to diminish “before disappearing entirely in early 2024.” Hatzius’ 15% recession forecast falls well short of the Bloomberg consensus of 60%. Goldman is also more bullish on U.S. economic growth than its peers, predicting an average of 2% through the end of 2024. Hatzius said the Fed’s September rate hike was “off the table” and the obstacle to a November hike was “significant.”