Goldman Sachs’ economists have revised their forecast, predicting a higher likelihood of a recession in the United States within the next year. They now estimate a 35% chance of a recession occurring by the end of 2024, up from their previous projection of 25%. This shift in outlook is attributed to the Federal Reserve’s ongoing efforts to combat inflation through interest rate hikes, which could potentially lead to a downturn in economic activity. However, Goldman Sachs also sees a 25% probability of a “soft landing,” where inflation is brought under control without triggering a recession. The firm’s analysis suggests that the labor market remains resilient, with the unemployment rate expected to rise modestly to 4.2% by the end of 2024, still below historical norms. While acknowledging the challenges posed by elevated inflation and tightening monetary policy, Goldman Sachs maintains a cautiously optimistic view, highlighting the potential for a soft landing scenario and the economy’s ability to navigate these uncertainties.
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