Goldman Sachs put the odds of a recession within a year at 25% in a research note on Monday.
This is down from 35% earlier this year.
According to the investment bank’s economist Jan Hatzuis, the decrease can be attributed to two major factors — the possible end of the banking crisis that started with the collapse of Silicon Valley Bank, and the recent debt ceiling deal.
In addition, the U.S. economy has doled out “large numbers of jobs while keeping the unemployment rate very close to its pre-pandemic level” of 3.5%, Hatzuis noted. Hatzuis also said that a slowdown in hiring may help decrease inflation.
The research note said that “each of our preferred measures of labor market balance has now reversed significantly more than half of its post-pandemic overshoot, but most still have some way to go before they are consistent with 2% inflation.”
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