There is a 35% % probability of a US recession in next 12 months – Goldman Sachs

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Analysts at Goldman Sachs noted, “we still see a 35% probability that the US economy will enter a recession in the next 12 months.”

“This is more than double the unconditional probability in any given 12-month period because:

“However, our 35% recession probability is well below the 60-70% consensus in the latest Wall Street Journal forecaster survey because we still see a very plausible four-step path from the high-inflation economy of the present to a low-inflation economy of the future without a recession.”

“The steps include:

a) bringing growth down to below-trend but positive rates,

b) rebalancing the labor market with only a limited increase in unemployment,

c) reducing wage growth to more sustainable levels,

and d) putting PCE inflation on a path back down to 2%.”

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