Goldman Sachs predicts that the probability of a US recession next year has increased to 25%

According to Odaily Planet Daily, Goldman Sachs economists raised the probability of a US recession next year from 15% to 25%. Despite the rising unemployment rate, they believe that the risk of a recession is limited, the overall economy is still good, and the Federal Reserve has room to cut interest rates.

Goldman Sachs expects the Fed to cut its benchmark interest rate by 25 basis points in September, November and December, while JPMorgan and Citigroup expect a 50 basis point cut in September. Goldman Sachs believes that job growth will resume in August and the FOMC will consider a 25 basis point cut to be sufficient to address downside risks.

If the August employment report is weak, a 50 basis point rate cut could be in the cards in September. Goldman Sachs is skeptical about the risk of a rapid deterioration in the U.S. labor market, arguing that job openings suggest solid demand.