Goldman Sachs economists raise 'limited' risk of US recession to 25% chance: report

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Economists at Goldman Sachs raised the likelihood of the U.S. economy slipping into a recession within the next 12 months from 15% to 25% while continuing to view the risk of recession as limited, according to a report.

Goldman economists led by Jan Hatzius, the firm's chief economist and head of global investment research, wrote that they «continue to see recession risk as limited» in a report to clients on Sunday that was reviewed by Bloomberg.

They said the U.S. economy appears to be «fine overall» and noted the Federal Reserve has ample room to cut interest rates if needed and can do so rapidly if upcoming data releases show signs that economic conditions are worsening amid worries the Fed has waited too long to lower rates.

Last week, the Bureau of Labor Statistics released its latest jobs report that  showed U.S. job growth slowed to 114,000 in July, less than the 175,000 gain forecast by London Stock Exchange Group economists. The unemployment rate also rose unexpectedly from 4.1% to 4.3%, the highest level since October 2021.

THE JULY JOBS REPORT JUST TRIGGERED A RELIABLE RECESSION INDICATOR

Recession fears have risen after a weaker-than-expected July jobs report. (Michael Nagle/Bloomberg via Getty Images/File)

The Goldman Sachs economists said they think job growth will improve this month and that will prompt the Fed to cut interest rates by 25 basis points, or 0.25% percentage points, though they noted that if the August jobs report is as sluggish as July's, they could opt for a larger cut.

«The premise of our forecast is that job growth will recover in August and the