Goldman Sachs has reduced its US recession risk forecast to 20%, down from 25%, citing recent retail and unemployment data.
Citing recent retail sales and unemployment data, economists at the global investment behemoth Goldman Sachs have reduced their likelihood of a recession in the United States within the next year to 20%.
The likelihood of a recession has decreased from their previous estimate of 25%, according to a report by Goldman’s economists to clients on August 17 that Bloomberg viewed.
They also stated that they would likely reduce the recession probability to 15%, where it has been for nearly a year, if the US jobs report for August, which is scheduled to be published on Sept. 6, “looks reasonably good.”
The economists noted that they were “more confident” that the US Federal Reserve would reduce interest rates by 0.25% during its September meeting.
However, they also acknowledged that “another downside jobs surprise on Sept. 6 could trigger” a 0.5% move.
On the heels of July’s retail sales figures, US equities have experienced a significant increase in the past week, surpassing analyst expectations.
This represents the largest increase since early 2023. Additionally, the US Labor Department reports that the number of individuals submitting new unemployment benefit applications reached a one-month low the week prior to the publication of the figures on August 15.
What is the Significance of this for Bitcoin?
IG Markets analyst Tony Sycamore stated to Cointelegraph that Goldman’s probability reduction was merely a “minor tweak” and was unlikely to result in “a good outbreak of risk-seeking flows across multiple asset classes, including crypto.”
Markus Thielen, the director of research at 10x Research, stated to Cointelegraph that Bitcoin traders “could welcome a rate cut, but there is also a risk that this implies a recession might be coming. In that case, we would expect Bitcoin to correct lower, as it did in 2019.”
He explained that when the Fed cut interest rates in July 2019, “Bitcoin initially surged by 20%” in a short-lived rally. Thielen added despite the Federal Reserve “implementing two additional rate cuts later that year, Bitcoin ended 2019 down 35% from its peak following the first rate cut.”
Nevertheless, there are economists who do not anticipate any reduction in the likelihood.
Business surveys indicate “a loss of momentum in global manufacturing,” and Bruce Kasman, the chief global economist at the investment bank, indicated that there were “hints at a sharper-than-expected weakening in labor demand and early signs of labor shedding.”
“However, these forces are being moderated by the service sector’s consistent improvement in overall activity.”
Kasman acknowledged “additional uncertainties related to the political backdrop,” and JPMorgan‘s probability of a recession by the end of 2025 remained at 45%.
