Goldman Sachs Lowers Recession Probability to 20%
Goldman Sachs– Economists at Goldman Sachs have revised their forecast, cutting the probability of a U.S. recession within the next year to 20%. This adjustment is driven by recent positive retail sales and improving unemployment data, signaling a stronger-than-expected economy. The revised estimate, down from the previous 25%, suggests the potential for even further reductions if upcoming job reports continue to show positive trends.
Impact on Federal Reserve’s Interest Rate Decisions
The updated forecast has also increased Goldman Sachs‘ confidence that the U.S. Federal Reserve may reduce interest rates by 0.25% at its September meeting. However, the economists warned that a weaker-than-expected jobs report on September 6 could push the Fed to consider a more significant 0.5% rate cut. This move could have broad implications for the economy, including potential effects on various asset classes.
Stock Market and Employment Figures Show Positive Signs
U.S. stock markets have responded positively to the latest retail sales data from July, which exceeded analyst expectations and marked the most significant increase since early 2023. Additionally, the U.S. Labor Department reported a decrease in new unemployment benefit applications, reaching a one-month low, further boosting market confidence.
What Does This Mean for Bitcoin?
Despite the optimistic economic outlook, IG Markets analyst Tony Sycamore suggests that Goldman’s minor adjustment to recession odds is unlikely to trigger a surge in risk-taking across asset classes, including cryptocurrency. On the other hand, Markus Thielen, head of research at 10x Research, pointed out that while Bitcoin traders might initially welcome a rate cut, there is a risk that it could signal an impending recession, which historically has led to Bitcoin corrections, as seen in 2019.
JPMorgan’s Perspective: Continued Uncertainty Ahead
JPMorgan’s chief global economist, Bruce Kasman, added that while there are early signs of a weakening labor market and potential job losses, these are being offset by solid gains in the service sector. JPMorgan’s own recession probability remains unchanged at 45% by the end of 2025, reflecting ongoing uncertainties, particularly related to the political landscape.
Conclusion: Navigating the Economic Landscape
As the U.S. economy shows mixed signals, investors are closely monitoring developments, especially in light of potential interest rate cuts. The implications for Bitcoin and other cryptocurrencies remain uncertain, with both potential upside and downside risks on the horizon. As we approach key economic reports and the Fed’s next meeting, markets will likely react swiftly to any new information.
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