Goldman Sachs has raised the likelihood of a U.S. recession next year to 25 per cent from 15 per cent previously

Global investment bank Goldman Sachs has reportedly raised the likelihood of a US recession next year to 25 per cent, up from 15 per cent previously, although they insist that risks remain limited.

Goldman Sachs economists, led by Jan Hatzius, believe that the overall economic outlook is stable, that there are no serious financial imbalances and that the Federal Reserve has the ability to cut interest rates quickly if necessary. Goldman Sachs forecasts show that the Fed will cut interest rates by 25 basis points in September, November and December consecutively, while JPMorgan Chase and Citigroup are more aggressive in predicting a 50 basis point cut in September. They believe that a 50 basis point rate cut is unlikely unless job growth in August is as weak as it was in July.

In addition, Goldman Sachs does not expect the labour market to deteriorate quickly due to strong job demand and the absence of major economic shocks.