Economists at Goldman Sachs have reduced their estimate of the likelihood of a U.S. recession within the next year to 20%, down from a previous forecast of 25%, citing improved retail sales and unemployment data.
In an August 17 report shared with clients, Goldman’s team, led by Jan Hatzius, noted that if the upcoming U.S. jobs report for August, set to be released on September 6, shows positive results, they might further reduce the recession probability to 15%. The economists also expressed increased confidence that the U.S. Federal Reserve might cut interest rates by 0.25% in September, though a weaker-than-expected jobs report could prompt a larger 0.5% reduction.
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The past week saw a surge in U.S. stocks following stronger-than-expected retail sales data for July, marking the largest increase since early 2023. Additionally, figures from the U.S. Labor Department revealed a drop in new unemployment benefit applications to a one-month low.
Implications for Bitcoin
Tony Sycamore, an analyst at IG Markets, told Cointelegraph that Goldman’s adjustment is a “minor tweak” and is unlikely to trigger a significant influx of risk-seeking investments across multiple asset classes, including cryptocurrencies.
Markus Thielen, head of research at 10x Research, noted that while Bitcoin traders might view a rate cut favorably, it could also signal an impending recession, which might lead to a downturn in Bitcoin’s value, similar to what occurred in 2019.
Bitcoin has remained flat over the past week despite the tech-heavy Nasdaq seeing a 5% over the same time
He explained that when the Fed cut rates in July 2019, Bitcoin initially surged by 20%, but despite subsequent rate cuts, Bitcoin ended the year down 35% from its peak.
However, not all economists agree with the reduced recession probability. Bruce Kasman, JPMorgan’s chief global economist, highlighted concerns about a potential decline in labor demand and early signs of job losses, tempered by continued strength in the service sector. JPMorgan’s recession probability by the end of 2025 remains at 45%, with Kasman acknowledging the added uncertainties due to the political environment.
Cre: cointelegraph
I’m Jessi Lee, currently living in Singapore. I am currently working as a trader for AZCoin company, with 5 years of experience in the cryptocurrency market, I hope to bring you useful information and knowledge about virtual currency investment.
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