Goldman Sachs cut its US recession probability after last week’s data, see 25bp Sept cut

A note from the economists at the investment bank. I haven’t seen it yet, but the news agencies are carrying the highlights.

In summary:

  • It lowered its forecast for a U.S. economic contraction from 25% to 20%, and said it could lower the forecast further to 15% if the August nonfarm payrolls report was “reasonably good.”
  • GS cites retail sales data, the best since early 2023, and jobless claims data showing the lowest number of applications for unemployment benefits in six weeks.

Goldman Sachs economists say they are now more confident of a 25 basis point rate cut at the September FOMC meeting (17-18), but a disappointment in the August jobs report could lead to a 50 basis point cut.

Retail sales data came out on Thursday of last week, and it was well above consensus:

The August nonfarm payrolls report is due out on September 6. Before that, we’ll hear Fed Chair Powell speak at Jackson Hole:

Next week doesn’t start until Thursday.

25bpCutDataGoldmanProbabilityrecessionSachsSeptweeks