05:39 PM
Tuesday 07 February 2023
I wrote – Shaima Hefzy:
The specter of recession has become steps away from the US economy, amid optimism about the labor market and job creation, in the world’s largest economies.
In a recent research note, Goldman Sachs cut its forecast of the US economy entering a recession in the new year from 35% to a probability of 25%.
“Continued strength in the labor market and early signs of improvement in business surveys indicate that near-term recessionary risks have diminished significantly,” the bank said in a research note.
According to US labor market data, the unemployment rate in the United States fell in January to 3.4%, the lowest level in 53 years, down for the second month in a row.
The rate of new job creation in the country also increased, and the government sector created jobs again.
The improvement in employment conditions and the decrease in unemployment came after pessimistic expectations that the large interest rate hike in America to counter inflation would slow the growth of the economy.
Goldman Sachs forecasts are consistent with those of economist Mohamed El-Erian, announced at the end of the week.
El-Erian, chief economic advisor at Allianz International, said in a podcast via Twitter, organized by Pensions & Investments, that he does not believe that the US economy is currently in a recession due to movements in the US labor market, although there is a possibility of a recession.
