What is going on here?
Goldman Sachs is a U.S. recession It rose to 20% from 25% due to rising unemployment claims and strong retail sales. sale data.
What does this mean?
Goldman Sachs revised its recession forecast after the latest data showed that jobless claims fell to a one-month low and retail sales jumped to an 18-month high. The investment bank raised its recession probability to 25% earlier this month after the unemployment rate spiked. But strong economic signs in July and early August led Goldman to scale back its concerns. Continued growth could move the U.S. economy closer to the G10, where the thumb rule, a sign of recession, is triggered less frequently.
Why should you care?
For markets: Optimism drives bull markets.
The latest data could lead to a more optimistic outlook for the US economy, lifting market sentiment. If the August employment report remains positive, Goldman is expected to further lower the probability of a recession to 15%. This positive change could also influence the Federal Reserve’s upcoming decisions, with a 25 basis point rate cut expected in September and even a 50 basis point cut if the employment report disappoints. Investors should keep a close eye on the job market, as it will likely drive Federal Reserve policy and market movements.
The big picture: Change the flow.
Reducing recession fears would not only boost market confidence, but also align the United States more closely with other developed countries. Fewer than 70% of G10 countries have triggered the thumb rule, an early warning signal of a recession. If the United States continues to expand, it could similarly ignore these signals and continue to grow, ensuring a robust global economic environment.
