Investors Feel Anxious Despite Falling Odds of a Recession

Logo The New York TimesThe New York Times
2023-09-05 11:51:44  • 9 mins

Some economists are playing down the chances of an economic downturn. But investors and voters arent feeling nearly as optimistic.

A recession seems remote, but market jitters persist

For the third time in three months, economists at Goldman Sachs have lowered the odds of a recession and now put the risk of a downturn in the United States at 15 percent. Yet despite the upbeat outlook, which follows other votes of confidence from Wall Street in recent weeks, global stocks and U.S. futures are in the red on Tuesday morning as inflation fears persist.

The strong labor market is propping up U.S. households. Real disposable income looks set to reaccelerate in 2024 on the back of continued solid job growth and rising real wages, Jan Hatzius, Goldmans chief economist, wrote in a client note. On Friday, the Labor Department reported that wage gains had cooled in August, but real wages, adjusted for inflation, are trending higher.

Goldman is far more bullish than others. In March, the bank raised its recession odds to 35 percent in the wake of Silicon Valley Banks collapse and worries that contagion could hurt other lenders. But fears of a bank-led downturn have all but disappeared. Still, a Bloomberg survey of economists puts the likelihood of a U.S. recession in the next 12 months at 60 percent.

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