Goldman Sachs raises the "recession risk" for the U.S. economy to 25%

Odaily Planet Daily News: Goldman Sachs economists have raised the possibility of a U.S. economic recession next year from 15% to 25%. However, they also point out that despite a significant rise in the unemployment rate, there are "several reasons not to worry about an economic recession".

Led by Jan Hatzius, Goldman Sachs economists stated: "We still believe that the risk of an economic recession is limited. The overall economy still looks good, with no major financial imbalances, the Federal Reserve has a lot of room to cut interest rates, and can cut rates quickly if necessary."

It is worth noting that Goldman Sachs' forecast for the Federal Reserve is not as aggressive as that of Morgan Stanley and Citigroup. Hatzius' team expects the Fed to cut the benchmark interest rate by 25 basis points in September, November, and December; in contrast, Morgan Stanley and Citigroup expect a 50 basis point cut in September.

The Goldman Sachs report stated: "Our forecast is based on the assumption that job growth will recover in August, and the FOMC will consider a 25 basis point rate cut sufficient to address any downside risks. If we are wrong, and the August employment report is as weak as July's, then there may be a 50 basis point rate cut in September." Economists added that they are skeptical about the "risk" of a rapid deterioration in the U.S. labor market. They say this because job vacancies indicate that demand remains solid, and there are no significant shocks causing a downturn. (Jinshi)