Goldman Trim Recession Odds To 25%

Late on Tuesday Goldman Sachs lowered their “judgmental probability that the economy will enter a recession in the next 12 months to 25% (from 35% previously), well below the 65% median probability in the Bloomberg forecaster survey.”

• “Activity growth remains positive but below potential, which will allow the rebalancing of supply and demand to continue.”
• “Our jobs-workers gap based on an average of JOLTS and alternative measures of job openings declined to 3.0mn in May, still above the 2mn level we estimate is necessary to rebalance the labor market but down three-fourths of the way from its 5.7mn peak in March 2022. And while initial jobless claims have increased to 262k in recent weeks, they remain 20-30k below our estimate of the level that would keep the unemployment rate unchanged. Our real-time estimate based on May and June WARN notices suggests the layoff rate is around its pre-pandemic level, at 1.2%.”