Goldman Sachs Chief Economist Jan Hatzius is one of the most bullish men on Wall Street—and he predicts only a 15% chance of a coming recession.
- On Tuesday, Goldman Sachs lowered its expectation of a 35% chance of a recession in the next 12 months from January to just 15%.
- On Monday, Hatzius wrote a letter to clients arguing that rising interest rates are having the effect he predicted they would—decreasing job openings while the economy remains resilient.
- 18 months of interest rates have resulted in economic deceleration but decreasing inflation.
- The general consensus holds that there is a 60% chance of a recession within the next 12 months, Fortune reports.
Why It’s Important
The economy continues to perform strangely, facing pressures that easily spur a recession in a weakened economy but continuing to face resilience and high consumer confidence that has kept it afloat. The current state of things likely suggests that the Fed will begin backing off high-interest rates by early next year. As Hatzius notes, “Our confidence that the Fed is done raising rates has grown in the past month.”
Hatzius remains one of the most bullish figures at the moment, having publicly disagreed with other economists last year about the overall direction of the economy. He believes that any economic recession faced will be “shallow and short-lived.”
“The continued positive inflation and labor market news has led us to cut our estimated 12-month U.S. recession probability further,” he says. “We view Chair Powell’s promise at Jackson Hole to ‘proceed carefully’ as a signal that a September hike is off the table and the hurdle for a November hike is significant.”
As we previously reported, unemployment increased to 3.8% while fewer jobs were created than expected. July’s Consumer Price Index came in at 3.2%, with August’s set to be revealed on Wednesday, September 13—likely affecting the Fed’s next move at its September 19–20 meeting.