At the beginning of the month, JP Morgan raises US recession probabilities by the end of the year to 35%, citing easing labor market pressures, while Goldman Sachs lowered its probability of a recession in the next 12 months to 20%.
Last week, the Department of Labor The United States had lowered its employment estimate by 818,000 total payrolls for the period from April 2023 to March 2024, meaning U.S. employers had added far fewer jobs than originally reported in the year through March.
This came after the US unemployment rate jumped to a near three-year high of 4.3% in July amid a significant slowdown in hiring, raising fears that the labour market was deteriorating and potentially making the economy vulnerable to a recession.
Expectations of a rate cut of up to 50 basis points at the US Federal Reserve’s September meeting have increased, with Federal Reserve Chairman Jerome Powell noting in his speech at Jackson Hole last Friday that “the time has come” to reduce rates .
With excess savings built up during the pandemic being depleted, “continued income growth will be critical to sustaining spending growth, as a stable savings rate is probably the best we can hope for,” said Brian Rose, chief U.S. economist at UBS.
