Goldman Sachs: US economic downturn not expected, Fed may slow down entry into "technical recession" in job market

According to Bloomberg, the U.S. economic recession is not the base case for Goldman Sachs, as Goldman Sachs Group strategist Gurpreet Gill stated that with the Federal Reserve likely to continue tightening monetary policy, as interest rates rise, the labor market may soften, leading the U.S. into a technical recession.

According to a report by Bloomberg, the U.S. recession is not Goldman Sachs' base case expectation, as stated by Gurpreet Gill, a strategist at Goldman Sachs. With the Federal Reserve (Fed) likely to continue tightening monetary policy and interest rates rising, the labor market may soften, leading the U.S. into a technical recession.

A technical recession occurs when the Gross Domestic Product (GDP) contracts for two consecutive quarters.

Gurpreet Gill stated, "When you think about investment opportunities in the context of the fixed income landscape, it's really about the scale and nature of this recession that you need to pay attention to."

She believes that as central banks globally raise interest rates to curb inflation, employment growth is expected to slow down.

In June, the Fed raised interest rates by 3 basis points, increasing the benchmark rate from 1.5% to 1.75%, marking the largest hike since 1994, with another rate hike expected by the end of July.

Gurpreet Gill pointed out that central banks are trying to slow down the job market, leading companies to postpone new hiring plans, but not necessarily resulting in massive layoffs.

This article is authorized to be republished from Horizon News Network