There is a 35% % probability of a US recession in next 12 months – Goldman Sachs
|Analysts at Goldman Sachs noted, “we still see a 35% probability that the US economy will enter a recession in the next 12 months.”
Additional quotes
“This is more than double the unconditional probability in any given 12-month period because:
- inflation is far above target,
- the Fed is tightening aggressively
- and we live in an exceptionally uncertain world in terms of both domestic US politics and geopolitics.”
“However, our 35% recession probability is well below the 60-70% consensus in the latest Wall Street Journal forecaster survey because we still see a very plausible four-step path from the high-inflation economy of the present to a low-inflation economy of the future without a recession.”
“The steps include:
a) bringing growth down to below-trend but positive rates,
b) rebalancing the labor market with only a limited increase in unemployment,
c) reducing wage growth to more sustainable levels,
and d) putting PCE inflation on a path back down to 2%.”
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