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Wall Street investment banks quickly changed their interest rate cut script, includingGoldman SachsMore optimistic, Citi is the most aggressive...

Goldman Sachs Group Inc. economists raised their forecast for a U.S. recession next year to 25% from 15%, but they said there should be no over-concerns about a recession even after unemployment rose.

“We continue to see limited recession risks,” Goldman Sachs chief economist Jeff Hatzius said in a note to clients on Sunday.

They said that, in general,The U.S. economy remains “well-performing,” with no major financial imbalances, and the Federal Reserve has plenty of room to cut interest rates and can act quickly if needed.

Last week, U.S. employment data showed that nonfarm payrolls slowed sharply in July and the unemployment rate rose to its highest level in nearly three years, raising concerns about an economic slowdown and worries that the Federal Reserve was moving too slowly in cutting interest rates.

Apart from non-agriculture, other labor market data are also relatively weak

After the release of the non-agricultural data, Wall Street investment banks quickly changed their interest rate cut script.Goldman Sachs' Fed forecasts fall shortJPMorganandCitigroupRadicalHatzius' team expects the Fed to cut its benchmark interest rate by 25 basis points in September, November and December. In contrast, JPMorgan Chase & Co. and Citigroup Inc. adjusted their forecasts to expect the Fed to cut rates by 50 basis points in September.

JPMorgan Chase predicts thatThe Fed is expected to cut interest rates by 50 basis points each in September and November, and each subsequent meeting has cut interest rates by 25 basis points; Citi's forecast is the most radical,Citi economists expect the Fed to cut rates by 50 basis points each at its September and November meetings, and by 25 basis points at its December meeting., who had previously expected the Fed to cut interest rates by 25 basis points at each of the three meetings.

Bank of AmericaIt is believed that the weaker-than-expected July nonfarm payrolls report, following other weak data such as the ISM manufacturing report, will help lock in the Fed's September rate cut, and the Fed is expected to cut interest rates by 25 basis points at its September meeting. TD Securities expects the Fed to cut interest rates by 75 basis points in 2024, that is, 25 basis points each in September, November and December.

Goldman Sachs economists said:

“Our forecast assumes that job growth will resume in August and that the Fed will deem a 25 basis point rate cut sufficient to address any downside risk. If we are wrong and the August payrolls report is as weak as July, then the Fed is likely to cut rates by 50 basis points in September.”

Analysts also said:They are skeptical about the risk of a rapid deterioration in the job market, in part because job openings suggest demand remains strong and there is no clear shock to trigger a recession.。