Goldman Sachs has raised its forecast for the probability of a US recession over the next 12 months to 35% from 25% previously, but its baseline scenario remains that there will be no sharp downturn that prompts the Federal Reserve to cut interest rates sharply.
“Our baseline expectation is that, while underpinned by higher real incomes and improving global growth, reduced credit availability will prove to be a headwind to help the Fed keep growth below potential rather than a hurricane that pushes the economy into recession and forces the Fed to act aggressively." chief economist Jan Hatzius wrote in a note to clients.
