Goldman Sachs has reduced the likelihood of a U.S. recession in the next year to 20%, down from its previous estimate of 25%, according to a report released. The report, led by chief economist Jan Hatzius, cites strong retail sales and improved unemployment data as key reasons for the adjustment. The bank hinted that if upcoming labor market data for August is favorable, the recession probability could be further reduced to 15%.
Goldman’s report also signals increased confidence that the Federal Reserve might lower interest rates by 0.25% in September. However, the economists note that a weak jobs report on September 6 could lead to a larger cut of 0.5%.
Positive retail sales data and declining unemployment claims have buoyed U.S. stocks, as July’s retail figures saw their biggest jump since early 2023. Unemployment claims for the week ending August 12 reached a one-month low, further supporting the view of a resilient economy.
Impact on Bitcoin
The potential rate cuts could have mixed effects on Bitcoin. Tony Sycamore, an analyst at IG Markets, told that Goldman’s minor adjustment may not spark significant risk-seeking behavior across asset classes, including crypto.
Markus Thielen, head of research at 10x Research, highlighted that while a rate cut might initially boost Bitcoin, it could also signal an approaching recession, which historically hasn’t been favorable for the cryptocurrency. Thielen pointed out that in 2019, after the Federal Reserve cut rates, Bitcoin saw a brief 20% rally before ending the year 35% below its peak.
Broader Economic Perspectives
Not all economists share Goldman’s optimism. JPMorgan maintains a 45% chance of a recession by 2025, citing uncertainties in labor demand and potential political risks. While Goldman is more optimistic, global economic data still presents a mixed outlook, particularly with manufacturing slowing in some regions.
The evolving economic landscape will be crucial for crypto investors as they navigate potential volatility driven by interest rate decisions and broader market sentiment.
