SUMMARY
Goldman Sachs has reduced its forecast for a US recession in the next year to 20%, driven by recent retail sales and unemployment data. This adjustment reflects improved economic indicators.
Goldman Sachs has degraded its prediction for a US recession within the coming year to 20%, attributing this adaptation to recent positive retail sales and unemployment data. This modification, down from the former estimate of 25%, reflects a more encouraging view of the economy’s short-term prospects. However, set for release on September 6, shows favorable results, If the approaching August jobs report.
Goldman Sachs’ economist team, led by Jan Hatzius, expressed raised confidence that the Federal Reserve will probably apply a 0.25 interest rate cut in September. nevertheless, a weaker-than-anticipated jobs report could invoke a more significant 0.5 reduction. The recent gain in US stocks, driven by July’s wholesome retail sales figures and a decline in new unemployment claims to a one-month low, underscores market optimism.
Despite this positive economic background, analysts have mixed outlooks on the potential impact on Bitcoin. IG Markets analyst Tony Sycamore hinted that Goldman Sachs’ revised recession probability is a fairly minor adjustment and may not significantly impact broader risk appetite, including in the cryptocurrency sector.
On the other hand, Markus Thielen, head of research at 10x Research, indicated that Bitcoin traders could react positively to a rate cut. Yet, he also advised of the possibility of a recessionary signal that could lead to a downturn in Bitcoin prices. mirroring on historical patterns, Thielen commented that although Bitcoin surged by 20% in reaction to the Federal Reserve’s rate cut in July 2019, it ultimately closed out the year 35% lower from its peak, despite subsequent rate reductions.
JPMorgan’s chief global economist, Bruce Kasman, has extended a more conservative perspective. Kasman emphasized signs of weakening labor demand and business surveys denoting a slowdown in global manufacturing. nevertheless, he also pointed out that the service sector continues to display strong performance, tempering the negative outlook. JPMorgan’s probability of a recession by the end of 2025 remains at 45%, admitting ongoing uncertainties related to the political terrain.
The reduced recession probability from Goldman Sachs reflects a more stable outlook for the US economy in the near term, driven by positive economic indicators and expected financial policy adaptations. notwithstanding, the mixed responses from analysts suggest that while some market participants may view the developments as encouraging, others remain conservative about implicit future economic risks.