Goldman Sachs lowered its forecast of a possible US recession, after the country announced a positive employment report in September.
Goldman Sachs predicts that the possibility of a recession in the US economy in the next 12 months is 15%, down 5% compared to the previous one. This move was made after the US Department of Labor released the September employment report. Accordingly, the number of new jobs created here reached a 6-month high. The unemployment rate also dropped to 4.1%.
“The September jobs report eased concerns that labor demand weakened rapidly. The unemployment rate also did not increase,” said Jan Hatzius – economist at Goldman Sachs.
Recently, the US has received many positive signals, both in terms of growth, inflation, employment and consumer confidence. GDP of the world’s largest economy increased by 2.8% in the second quarter. This speed is higher than the first quarter of the year (1.4%) and slightly better than economists’ forecasts. Inflation is also close to the Fed’s 2% target.
Shoppers at a supermarket in Illinois (USA). Image: Reuters
Hatzius also maintained the forecast that the US Federal Reserve (Fed) will reduce reference interest rates by another 25 basis points (0.25%) in the upcoming sessions, bringing interest rates to 3.25-3.5%. in June 2025. “The possibility of a decrease of 50 basis points (0.5%) like in September is unlikely,” he said.
According to the CME FedWatch interest rate tracker – the Fed’s favorite gauge – investors expect a 95.2% probability of a 25 basis point rate cut at the November meeting. This rate skyrocketed from 71.5% before the jobs report was released.
However, Goldman Sachs warns that employment figures may fluctuate. “Overall, there are no clear factors that could cause job growth to slow down, in the context of still large job postings and rising GDP,” Hatzius said. However, October data may be complicated, as the US economy was affected by storms and a major labor strike at seaports.