Goldman Sachs lowers probability of a US recession to 20 percent in latest note

Goldman Sachs has lowered the probability of a US recession next year to 20 percent, having raised it to 25 percent after a jobs report released earlier this month, and said it is in line for a further reduction based on August jobs report due next month.

Basing the decision on retail sales and jobless claims data for the week gone by, Goldman Sachs analysts said. "After the July jobs report released on August 2 triggered the “Sahm rule,” we raised our 12-month US recession probability from 15% to 25%. Now, we have moved it back down to 20%."

Goldman Sachs Group economists had earlier this month increased the probability of a US recession next year to 25% from 15%, but added that the economy continues to look “fine overall”.

If the August jobs report “looks reasonably good, we would probably cut our recession probability back to 15%, where it stood for almost a year,” Goldman Sachs economists led by Jan Hatzius said in a note on Saturday.