“We have now lowered our probability from 25% to 20%, mainly because the July and early August data released since August 2 show no signs of a recession,” Goldman Sachs chief U.S. economist Jan Hatzius said in a note Saturday.
“A continued expansion would make the US more like other G10 economies, where the Sahm rule has been in place less than 70% of the time,” he added.
Thursday’s jobless claims report showed the number of Americans applying for unemployment benefits fell to a one-month low in the previous week, while other data on the same day showed retail sales rose in July by the most in a year and a half.
Hatzius said that if the August jobs report looks “reasonably good,” he would lower the probability of a U.S. recession to 15%.
He said the Fed would cut interest rates by 25 basis points at its September meeting, but did not rule out a 50 basis point cut if the jobs report falls short of expectations.
