Goldman Sachs’ Economist Bullish on Economy: Recession Odds Drop
In a recent statement, Goldman Sachs' Chief Economist, Jan Hatzius, revealed that the bank has revised its estimation of a U.S. recession starting in the next 12 months. The probability has been lowered to 20%, down from the previously forecasted 25%.
The decision to reduce the probability is rooted in the bank’s confidence that inflation can be managed without necessitating a recession.
Hatzius emphasized that recent data have bolstered this belief, particularly with evidence of slowing consumer and producer price inflation in June. This slowdown in inflation could potentially lead to a more accommodating monetary policy going forward.
The economy has remained resilient despite higher borrowing costs since the Federal Reserve began its rate-hiking campaign in early 2022.
Hatzius acknowledged that some deceleration is expected in the next few quarters, primarily due to slower real disposable personal income growth and reduced bank lending. Nonetheless, he maintained an optimistic outlook for economic growth, albeit at a pace below the trend.
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Regarding the current inversion of the Treasury yield curve, Hatzius dismissed it as overly pessimistic, asserting that it reflected gloomy economic forecasts. Typically considered a precursor to a recession, the inverted yield curve could indicate expectations of rate cuts from the Federal Reserve to stimulate the economy.
However, Hatzius suggested that lower inflation might provide a plausible scenario for interest rate cuts, regardless of the yield curve inversion.
Looking ahead, Hatzius anticipates a final 25 basis points rate hike at the upcoming rate-setting meeting by the U.S. central bank. This would conclude the current monetary tightening cycle.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
