Economists at Goldman Sachs are increasing the odds that the US economy will enter a period of an economic downturn by the end of the year.
Analysts at the banking behemoth have raised the odds of a recession occurring in the coming months from 15% to 25%, citing the last month’s jump in unemployment data, reports the Straits Times.
Goldman has increased the odds of a recession from 15% to 25%, citing the last month’s jump in unemployment data.
But the bank believes a timely Fed rate cut would help the US job market get back on track.
“The premise of our forecast is that jobs growth will recover in August and the FOMC (Federal Open Market Committee) will judge 25 basis-point cuts a sufficient response to any downside risks. If we are wrong and the August employment report is as weak as the July report, then a 50 basis-point cut would be likely in September.”
The labor market is not the only sector feeling the impact of the Fed’s “higher for longer” approach to interest rates.
In a press release, US bankruptcy data provider Epiq AACER reveals that total bankruptcy filings in the country rose from 35,727 in July 2023 to 44,427 last month – a 24% increase.
Says Epiq AACER Vice President Michael Hunter,
“We continue to see a strong and steady rise in bankruptcy filings across the board, reflecting ongoing financial pressures faced by both businesses and individuals. Based on current trends and economic indicators, I expect bankruptcy filing volumes to continue this steady increase throughout the remainder of 2024 and into 2025.”
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