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%.”
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
