Goldman’s chief economist Jan Hatzius said the bank is lowering its recession forecast as a result.<\/p>\n
“We have shaved our 12-month US recession probability from 30% to 25% as economic activity has held up well and our financial conditions index has eased back below pre-war levels,” he wrote on Monday.<\/p>\n
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Goldman Sachs.<\/p>\n
The economist highlighted a few other recent statistics that he thinks support a lower recession forecast. He noted that while headline GDP growth failed to meet expectations in the first quarter of this year, private domestic sales showed steady growth, rising 2.5%.<\/p>\n
The bank’s view comes as some other prominent voices are still sounding the alarm on recession likelihood. Veteran economist Gary Schilling recently predicted a recession<\/a> by the end of 2026, while Mark Zandi of Moody’s Analytics sees recession odds as “highly elevated”<\/a> at 40%.<\/p>\n Hatzius acknowledged that Goldman’s recession forecast is still above both the pre-war level and unconditional long-term average by 5 points and 10 points respectively. Yet, he highlighted several reasons the bank sees relatively little impact from the war and the 10-week closure of the Strait of Hormuz.<\/p>\n “Fiscal policy, the AI boom, and\u2014with a brief interruption in March\u2014financial conditions have been supportive all year,” he wrote. “Under our baseline assumption of a gradual Strait reopening that starts soon and finishes in late June, we see Brent prices stable in the near term and edging down to $90\/barrel by year-end.”<\/p>\n