Leading financial management firm Goldman Sachs has cut its’ probability forecast for a US recession to 20%, only a few weeks after raising it to 25%. Despite fears that were sparked following the July jobs report, Goldman has said that data released since August 2^nd (when the probability was raised) showed no sign of recession. Factors such as the rise in retail sales in July and the lower-than-expected rate of unemployment benefit claims have helped rebuild confidence in the world’s largest economy.

While there are still concerns over the labour market, the expectation is that a ‘healthy’ jobs report due on September 6^th could see a drop back to the 15% prediction that it had held for nearly a year before August. This would also reassure them in their forecast for a 25-basis-point interest rate cut by the Federal Reserve in September.  

Goldmans’ predictions are expected to have a calming effect across the markets, following a tumultuous few weeks fuelled by recession fears

(Sources: cnbc.com)