Jan Hatzius, chief economist at Goldman Sachs Group Inc., said the US economy is still avoiding a recession despite the Fed’s aggressive tightening and geopolitical uncertainty. He said he believed it remained a “very plausible” path.
Goldman maintained a 35% chance that the US economy will enter a recession over the next 12 months. That probability is well below Wall Street’s consensus expectations.
Initiatives to avoid a recession include slowing economic activity, slower nominal wage growth, lower inflation and a more balanced labor market.
“We are already seeing a shift to growth that is below potential but still positive, and looks set to continue,” Hatzius said in a statement.
Mr. Hatzius’ point of view is contrary to the widely held perception on Wall Street. In the market, a growing number of economists believe a recession will be needed for the Fed to achieve its goal of easing price pressures. A Bloomberg poll of economists in October put the odds of the economy going into recession in the next 12 months at 60%, up from 50% in September. Compared to six months ago, the probability has doubled.
Goldman Sachs said the US may be able to avoid a recession, but sees recessions in the eurozone and the UK as inevitable.
Hatzius said he expects the start of a recession in the euro zone in the fourth quarter and that the UK was likely already in a recession in the third quarter.
news-rsf-original-reference paywall">Original title:Goldman Sachs sees a “very plausible” path to avoiding a US recession(extract)
