Economists at Goldman Sachs have reduced the likelihood of a recession in the United States.
As Bloomberg News reported On Saturday (August 17), the banking giant estimated that an economic downturn could occur based on the latest data on retail sales and unemployment figures, with the probability previously being 25 percent.
And assuming the next jobs report, due out Sept. 6, “looks reasonably good, we would likely lower our recession probability back to 15%, where it has been for nearly a year,” Goldman economists wrote before a revision on Aug. 2.
The Bloomberg report noted that a variety of data showing the strength of the American economy helped stock prices to their best week of 2024. The value of retail sales rose in July by the most since early 2023, while unemployment data last week showed the smallest number of jobless claims since early July.
Goldman economists also argued that they had become “more confident” that the Federal Reserve would cut interest rates by 25 basis points at its September meeting, “although another surprise in the employment numbers on September 6 could still trigger a 50 basis point move.”
In an article on retail sales last week, PYMNTS wrote that it was still not clear whether the recovery in July brings enough momentum to allow retailers to relax during the crucial fourth quarter and holiday shopping season.
“We have noted that inflation has fallen below 3% and as announced yesterday, inflation was 0.2%, up from a 0.1% decline in June,” the report said.
“Of course, when you connect the dots – inflation was up but was outpaced by unadjusted sales in July – it means that consumers bought more of most of the items they use in their daily lives, with the exception of what we consider summer wardrobe and summer-related leisure gear.”
It is also important to note that the product categories that are less discretionary or cheaper have increased in terms of total retail sales – food and beverages stand out here, while convenience stores such as Walmartthe reported strong results said last week that comparable sales rose more than 4% in the last quarter.
Research from PYMNTS Intelligence found that both seasonally adjusted and unadjusted sales increased year-over-year (measured against 2023), and that July’s momentum may continue to boost retail sales well beyond the end of the summer.
