In the US, Treasury Secretary Janet Yellen reiterates that she does not expect a recession in the country, while Wall Street banks are lowering their recession expectations. Goldman Sachs lowered its expectation for the probability of a recession in the US next year to 20 percent.
According to Goldman Sachs Chief Economist Jan Hatzius, the US economy has a better chance of avoiding a recession in the next 12 months, after the latest positive data on economic activity and inflation.
“We are reducing the probability of a recession starting in the US in the next 12 months from 25 percent to 20 percent. The main reason for the revision in our expectation is our belief that a recession is not needed to bring inflation down to a reasonable level,” Hatzius said in a report Monday.
Hatzius said there are “strong fundamental reasons” to expect a continued easing in inflationary pressures after core inflation in the US hit the lowest level since 2021 last month.
Hatzius said that as the Fed prepares to raise rates again next week, this will likely be the last in a series of tightening that began last year.
“We expect some slowdown in the next few quarters, particularly as adjusted for the resumption of student debt payments in October, due to slowing real disposable personal income growth and reduced bank lending. However, the easing in financial conditions, the housing market recovery and the continued boom in factory construction have contributed to the U.S. It shows that the economy will continue to grow, albeit at a slower pace,” he said.