U.S. Recession Odds Drops To 15% Post Jobs Report: Goldman Sachs

Recent events have eased worries of a recession. Although the news of the United States entering a recession has been prominent for some time, the most recent job data was a huge relief for the nation. With the biggest employment growth in six months and a drop in unemployment to 4.1%, Goldman Sachs continued to lower its prediction of a US recession to 15%.

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Goldman Sachs’ Insights On Recession And Rate Cuts

A recent note was published by Goldman Sachs, which revealed that the September employment data has “reset the labor market narrative.” It addresses concerns about labor demand “weakening too quickly to prevent the unemployment rate from trending higher.” Speaking about recession and the latest data, Goldman Sachs chief U.S. economist Jan Hatzius further added,

“More broadly, we see no obvious reason for job growth to be mediocre at a time when job openings are high and GDP (gross domestic product) is growing strongly.”

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Goldman Sachs Highlights Rish Of Rate Cuts

Apart from its recession forecast, Goldman Sachs indicated its anticipation of rate reductions. The company stuck to its prediction that it will lower rates by 25 basis points in a row. This ended in a terminal rate of 3.25–3.5% by June 2025. It should be noted that the Federal Reserve decreased its policy rate by 50 bps in September to the 4.75%-5.00% range, its first rate drop since 2020. Hatzius said:

“We now see much less risk of another 50-bps rate cut.”

Job Figures And Potential Obstacles

Goldman Sachs has faith in the job figures despite some volatility because of the huge number of job opportunities and strong GDP growth. However, the firm also continues to exercise caution over possible obstacles to October’s payroll figures, including the effects of a hurricane or a significant strike in the United States.

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