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Goldman cuts probability of US recession in next year to 15%

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The probability for a US recession over the next year is back at the long-term average of 15% after a blowout payrolls report for September reduced the chances for such a downturn, Goldman Sachs Group Inc. economists said.

In early August, Goldman increased the chance of a downturn to 25% from 15%, before paring the call to 20% in the middle of that month as the labor market and retail sectors showed signs of resilience.

Payrolls data on Friday trounced forecasts by rising 254,000 in September, while the unemployment rate fell to 4.1%.

“We have cut our 12-month US recession probability back to the unconditional long-term average of 15%,” Goldman’s chief economist Jan Hatzius wrote in a report to clients late Sunday.

The data “reinforced our conviction” that the Federal Reserve will slow the pace of its interest-rate cuts to 25 basis points in November, he said.

 

Source: bloomberg.com

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