Goldman Sachs reduces the chances of a US recession from 25% to 20%

(Reuters) – Goldman Sachs Group Inc cut the chance of the United States entering a recession in the next 12 months to 20% from 25%, after reports of positive jobless claims and retail sales last week.
Earlier this month, the brokerage raised the odds of a U.S. recession to 15%, after the unemployment rate jumped to a three-year high in July, raising fears of a slowdown.
“We have now lowered our probability from 25% to 20%, mainly because the data since August 2 shows no signs of a recession,” Jan Hatzius, chief economist at Goldman Sachs, said on Saturday.
Thursday’s jobless claims report showed claims fell to their lowest level in a month the previous week, while separate data showed retail sales saw their biggest increase in a year and a half in July.
Hatzius said that if the August jobs report looks “reasonably good,” he would reduce the probability of a U.S. recession to 15%.
Goldman Sachs’ chief U.S. economist said the Federal Reserve will cut interest rates by 25 basis points at its September meeting, but did not rule out a 50 basis point cut if the jobs report comes in below expectations.