Goldman Sachs

According to Goldman Sachs, a recession in the US does not mean that everything is going to be fine

Wall Street’s most powerful bank for investment remains optimistic despite warnings from investors and business leaders that a recession is on the horizon.

Goldman Sachs informed clients Monday that it still believes there is a 35% chance for a US recession within the next 12 months. This is twice the normal chance of a recession but it is still far lower than the 63% average forecaster survey by The Wall Street Journal.

Jan Hatzius, Goldman Sachs chief economist, wrote that he still believes there is a four-step non-recessionary path to move from the current high-inflation economy to the future low-inflation one.

A recession is not an easy task. Still, the Federal Reserve can pull off a soft landing in the US economy.

A Bloomberg Economics model, released in October, found that the likelihood of a recession within the next 12 months is 100%. Ned Davis Research also found that there was a 98.1% chance for a global recession.

Goldman Sachs said that the transition to more sustainable, but still positive economic growth has already taken place and looks durable. The bank anticipates that gross domestic product growth will be around 1% in the next year.

Despite Friday’s stronger-than-expected jobs report, Goldman Sachs says the rebalancing of the job market “looks to be on track.”

The bank is pleased with the fact that wages are now lower, but they remain high.

Hatzius stated that the slowdown of nominal wage growth was the most encouraging step on the path to a soft landing.

High inflation remains the greatest problem for the economy.

Goldman Sachs admits that the price side has made “much less progress.” While inflation metrics have largely stopped getting worse, they have not improved.

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