Goldman Sachs Group Inc. has revised its outlook, now estimating a 15% probability of the United States entering a recession.

This is a decrease from their previous estimate of 20%.

The revision comes as a result of moderating inflation and a labor market that remains robust, implying that the Federal Reserve may not find it necessary to implement additional interest rate hikes, Bloomberg reported.

“First, real disposable income looks set to reaccelerate in 2024 on the back of continued solid job growth and rising real wages,” Jan Hatzius, chief economist at Goldman, said. “Second, we still strongly disagree with the notion that a growing drag from the ‘long and variable lags’ of monetary policy will push the economy toward recession.”

He anticipates that the negative impact of policy tightening will continue to wane and is expected to completely dissipate by early 2024.

Hatzius’s recession estimate of 15% stands in contrast to the Bloomberg consensus, which is significantly higher at 60%.

Additionally, Goldman Sachs holds a more positive view on U.S. economic growth compared to other financial institutions, forecasting an average growth rate of 2% through the conclusion of 2024.

Written by staff