Goldman Sachs economists have cut the probability of a U.S. recession next year to 20% from 25%, citing retail sales and jobless claims data.
If the August jobs report due on Sept. 6 comes in reasonably good, we could lower the probability of a recession back to 15%, where the odds had been for about a year before the Aug. 2 revision, Goldman economists led by Jan Hatzius said in a report to clients on Saturday.
A wave of data showing the strength of the U.S. economy sent stock indexes to their best weekly performance this year, as buyers stepped in after the recent pullback. Retail sales in July posted their biggest acceleration since early 2023. Separate government figures showed that applications for unemployment benefits last week were the lowest since early July.
Goldman economists also said they were more confident the Fed would cut interest rates by 25 basis points at its September policy meeting, although an unexpectedly weak jobs report due on Sept. 6 could prompt a 50 basis point cut.
