Despite many experts’ views to the contrary, Goldman Sachs says that it is not forecasting a recession.
- While other experts warn that the U.S. economy will soon enter a recession, Goldman Sachs experts say that there is only a 35% chance of recession.
- This positive outlook is due to what the investment banking company calls a “unique” recalibration of the labor market.
- Experts at Goldman point out that companies are cutting job openings rather than active positions, resulting in a cooling job market that does little damage to the rest of the economy.
Why it’s news
While many economists and CEOs are warning about a looming recession, Goldman’s take analyzes a unique change in the labor market.
“This has never happened before,” says Goldman global economic team leader Daan Struyven to CEODaily, “the drop in the job openings rate is more than twice as large as the largest drop we have ever seen outside of a recession.”
In response to the unique job market, Goldman has a new market reaction to watch for—“excess jobs.” The term refers to a gap between the number of job openings and the number of those unemployed.
Excess jobs first made an appearance following the pandemic, reaching a peak of 6 million in early 2022. As interest rates rise, excess jobs are dwindling back down to around 4 million. Goldman argues that when excess jobs reach lower levels, wage growth will regulate.
The labor market has yet to reach that point, however. Inflation is continuing and supply issues continue to affect the overall market. If these issues persist, Goldman does see a chance of recession, though it places these odds at one in three.