Goldman Sachs has reduced its estimate of a U.S. recession within the next year to 20%, down from 25%, based on recent positive trends in retail sales and unemployment data. According to an Aug. 17 report from Goldman’s economists, led by Jan Hatzius, the probability could drop even further to 15% if the upcoming U.S. jobs report for August, due on Sept. 6, shows favorable results.
The report also indicated that Goldman’s economists are increasingly confident that the U.S. Federal Reserve will cut interest rates by 0.25% in September. However, they noted, “another downside jobs surprise on Sept. 6 could trigger” a more significant 0.5% rate cut.
Recent economic indicators have been encouraging, with U.S. stocks rallying on the strength of July’s retail sales figures, which exceeded analyst expectations with the most significant increase since early 2023. Additionally, the U.S. Labor Department reported on Aug. 15 that new unemployment benefit applications had fallen to a one-month low.
Impact on Bitcoin
While these developments are positive for the broader economy, the implications for Bitcoin remain uncertain. IG Markets analyst Tony Sycamore suggested that Goldman’s adjustment was “a minor tweak” and unlikely to lead to significant risk-seeking behavior across various asset classes, including cryptocurrency.
Markus Thielen, head of research at 10x Research, echoed this sentiment, noting that while Bitcoin traders might welcome a rate cut, it could also signal a looming recession. Thielen recalled that when the Fed cut rates in July 2019, “Bitcoin initially surged by 20%” but eventually ended the year down 35% from its peak despite further rate cuts.
Bitcoin’s performance over the past week has remained flat, in contrast to a 5% rise in the tech-heavy Nasdaq, according to CoinGecko data.
However, not all economists are optimistic about the reduced recession risk. Bruce Kasman, JP Morgan’s chief global economist, pointed to signs of weakening labor demand and a potential slowdown in global manufacturing. Kasman noted that while these factors are offset by continued strength in the service sector, JPMorgan’s recession probability by the end of 2025 remains at 45%, with additional uncertainties stemming from the political landscape.
