Probability of a recession in the US

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  • Goldman Sachs Research pegs the probability of a U.S. recession at 35%. “Our most out-of-consensus forecast for 2023 is our call that the U.S. will avoid a recession and instead continue progressing toward a soft landing,” Mericle and Phillips wrote in a recent report.  
  • Mericle expects the jobs-workers gap — defined as total labor demand minus total labor supply — to narrow steadily next year, due mainly to a further drop in job openings but also to a limited increase in the unemployment rate to just over 4%.
  • The long-awaited recovery of supply chains is likely to push core goods inflation into negative territory this year, driving most of the decline in overall core inflation, according to Mericle.
  • Phillips sees the risk of a recession and the need to raise the debt limit as the two factors that have the potential to influence fiscal policy changes in 2023. However, major changes are unlikely, he says. 

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