Summary:
Goldman Sachs reduces U.S. recession risk from 25% to 20%.
Potential further reduction to 15% if August jobs report is favorable.
Retail sales and jobless claims show positive trends.
Expectations of a 25 basis point interest rate cut from the Federal Reserve.
Goldman Sachs economists have lowered the likelihood of a U.S. recession within the next year from 25% to 20%. This shift is attributed to recent data revealing improvements in retail sales and jobless claims. If the upcoming August jobs report, set for release on September 6, shows positive results, the recession probability could drop further to 15%, which reflects the earlier estimate before the upward revision on August 2.
Positive Economic Indicators
Recent economic indicators have driven U.S. stocks to their best weekly performance of the year. Notably, retail sales in July saw a significant rise, while unemployment benefit claims hit their lowest level since early July.
Federal Reserve's Interest Rate Outlook
Goldman Sachs economists also expressed increased confidence that the Federal Reserve will implement a 25 basis point rate cut during its September meeting. However, a disappointing jobs report could lead to a more aggressive 50 basis point cut.
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