Goldman Sachs is increasingly confident that the US economy will stick the soft landing that many thought was nearly impossible to pull off.
In a research report published Monday night, Goldman Sachs lowered its estimated chance of a US recession over the next 12 months to just 15%.
Thatβs basically in-line with the historical average chance of a recession on any given year. Itβs also down from the Wall Street bankβs prior forecast of 20% and well below its 35% projection in March as the banking crisis erupted.
The report, titled βSoft Landing Summer,β pointed to a series of encouraging economic indicators on inflation and the jobs market that suggest the US economy will avoid the Federal Reserve-fueled recession that many feared.
Tamping down inflation without throwing the economy into recession is whatβs called a βsoft landing,β something the Fed has only achieved once in the past 60 years.
βWe strongly disagree with the notion that a growing drag from the βlong and variable lagsβ of monetary policy will push the economy toward recession,β Jan Hatzius, Goldmanβs chief US economist, wrote in the report.
βIn fact, we think the drag from monetary policy tightening will continue to diminish before vanishing entirely by early 2024.β
Hatzius added that Goldman Sachs is increasingly confident that the Fed is βdoneβ raising interest rates as unemployment rises, wages slow and inflation eases. Source: CNN
