Jan Hatzius, chief economist and head of global investment research at Goldman Sachs, joins ‘Squawk on the Street’ to explain why the company lowered the recession probability from 35% to 25% and more. For access to live and exclusive video from CNBC subscribe to CNBC PRO:
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BREAKING: Recession News
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Here’s Why Goldman Sachs Cuts Recession Probability from 35% to 25%
Goldman Sachs, one of the world’s leading investment banking firms, has revised its projection for a potential recession in the near future. Previously, the firm had estimated a 35% chance of an economic downturn, but it has now lowered the probability to 25%. This development has caught the attention of analysts and investors alike, as Goldman Sachs is widely respected for its accurate market predictions.
There are several factors behind Goldman Sachs’ favorable adjustment. First and foremost, the global economy is showing signs of recovery after the impact of the COVID-19 pandemic. Vaccination rates are increasing in many countries, leading to a decline in infections and a gradual easing of restrictions. This positive development has not only boosted consumer confidence but has also encouraged businesses to resume operations, supporting economic growth.
Furthermore, the fiscal stimulus measures taken by various governments have played a significant role in stabilizing and reviving the economy. Governments worldwide have implemented expansive spending programs, providing financial assistance to struggling businesses and individuals. These moves have stimulated demand and injected liquidity into the market, safeguarding against a severe economic slump.
Another vital factor in Goldman Sachs’ revision is the accommodative monetary policy adopted by central banks across the globe. Central banks, including the US Federal Reserve, have kept interest rates at historically low levels and implemented bond purchasing programs. These measures have effectively supported lending, encouraged investment, and facilitated economic expansion.
Additionally, Goldman Sachs has acknowledged the robust corporate earnings reported by companies during the second quarter. Many businesses have experienced a strong rebound, surpassing pre-pandemic levels and exceeding market expectations. These positive earnings reflect consumers’ pent-up demand and their willingness to spend, bolstering economic prospects.
However, it is essential to understand that the revision does not entirely eliminate the possibility of a recession. Uncertain factors, such as potential COVID-19 variants, geopolitical tensions, or unexpected shocks to the market, can still impact the economic landscape. Goldman Sachs’ revised probability simply indicates a more optimistic outlook based on the current state of affairs.
Goldman Sachs’ downward revision offers a ray of hope for businesses and investors alike. It suggests that the worst-case scenario of a recession may not be as likely as previously believed. However, it is essential to remain cautious and vigilant as the trajectory of the economy remains susceptible to various external factors.
In conclusion, Goldman Sachs’ decision to reduce the estimated recession probability from 35% to 25% indicates a renewed confidence in the global economic recovery. Factors such as increasing vaccinations, fiscal stimulus measures, supportive monetary policies, and robust corporate earnings contribute to this optimistic outlook. Nevertheless, the unpredictability of the current landscape necessitates ongoing vigilance, and it is crucial to monitor future developments closely.
We’re in inning 4 of his recession.
Let me translate …. Basically 2 reasons we noticed a good boost in our own sales when we change our out look so we changed our outlook. Also we can’t make as much money in a recession so we need to keep this going for as long as we can. Additionally in a recession we will still take over all the small banks so we have nothing to worry about
It’s hilarious that the majority of experts are wrong, whats the point of even listening your chances of success are higher if you rely on the flip of a coin
The fact that we have the head of the treasury, many in the Federal Reserve and a majority of economists making claims that recession probabilities are so low should scare anybody who even vaguely understands economics and the nature of cycles. The sheer amount of data indicating a monumental recession somewhere in the short to medium term future is overwhelming. Like, it makes 1929 look like a manageable slowdown. A world where a recession does not occur is a world where the planners have chosen inflation and currency destruction. It is the only scenario where a recession won't occur based on the existing data.
larry fink sold on april stocks… why???…. the stock market is in a boom… i am expecting a recession.. a severe one…. and they know it….
These guys are either lying or just completely stupid. To be fair, they could be both…
The bond market must be completely wrong. It believes things will be so bad that the FED will be making cuts within months. Someone is completely wrong or dishonest.
Only 25 percent now hmmm. The oil market keeps downgrading oil demand as OPEC makes cuts after cuts. I wonder who's right ?
Funny how Goldman Sachs still is seen as credible when it comes to recessions considering they bankrupted AIG with credit default swaps on the mbs they sold there own clients during the last one if that's not leading your clients to the slaughter house idk what is.
Insightful video. I just want to know best how people split their pay, how much of it goes into savings, spendings or investments. I'm 27, and earn nothing less than $150k per year, but nothing to show for it yet. The best part of my small investments are in stocks and crypt0 but I've been in the red as I bought during the peak in 2021, anyone know when the crypt0 bull-run would happen again?
bada bing
Case Shiller has reported 2 consecutive months of rising home prices in a high rate environment. Housing inflation is going to re-accelerate in the second half of the year if the Fed lets off now.
There will be no Recession or a Housing Crash or any other kind of Crash . The economy is doing fantastic on all fronts .
Did they pull this figure out of their bottom just like the last time?
I thought we were already in a recession. What is this Bond villain talking about?
Any time you pay the middle class more money you secure the economy!!!! Pay working people!
Well, my base case is that the US is coming from a recession.
but why not 24%? I would argue it is down to 24% not 25% according to my position, excuse me, model.
Im only 25% believing in him.
These guys have no idea what they are talking about
WHY YOU NEED GOLDMAN SACHS TO PREDICT RECESSION.
When everyone is calling for a recession, it means theres no recession upcoming. When everyone starts saying there wont be a recession, thats generally a good time to get out