{"id":9350,"date":"2026-06-26T20:02:37","date_gmt":"2026-06-26T20:02:37","guid":{"rendered":"https:\/\/www.fintechpulse8.com\/?p=9350"},"modified":"2026-06-26T20:02:37","modified_gmt":"2026-06-26T20:02:37","slug":"goldman-sachs-revamps-recession-odds-after-oil-shock-fades","status":"publish","type":"post","link":"https:\/\/www.fintechpulse8.com\/?p=9350","title":{"rendered":"Goldman Sachs revamps recession odds after oil shock fades"},"content":{"rendered":"

<\/p>\n

Americans were bracing for a nastier summer economy.<\/p>\n

Naturally, the sentiment was that the Middle East oil shock would continue pushing gas prices higher, keep inflation sticky, pressure consumers, and make the Federal Reserve even harder to predict.\u00a0<\/p>\n

In a new note shared with me, though, Goldman Sachs now says that the danger has eased.<\/p>\n

The bank argues that the U.S.-Iran agreement has reduced downside risks to the economy, with lower energy prices and a labor market showing more resilience than expected. Americans worried oil would reignite inflation, but Goldman sees cheaper gas helping real income instead.<\/p>\n

It\u2019s far from an “all-clear” call, though, as Goldman still sees moderating growth, a pressured consumer, and a Fed communication problem that could make markets a lot more volatile.<\/p>\n

So the story moves from recession panic to the question of whether the soft landing can survive its next test.<\/p>\n

\n

Goldman Sachs recession risk outlook shows lower U.S. recession odds after the oil shock fades and energy prices ease.<\/p>\n

Brandon Bell&sol;Getty Images<\/p>\n<\/figcaption><\/figure>\n

What Goldman Sachs says about recession risk\u00a0<\/strong><\/h2>\n

Goldman Sachs just made a big change to its U.S. recession call.<\/p>\n

The bank cut its 12-month recession-risk estimate to 15%, down from 25% after the Iran-led oil shock.<\/p>\n

Goldman said that steers the probability back to its long-term norm. Moreover, the new estimate is also below the 20% level it assigned on the eve of the war, with the labor market showing greater underlying resilience.<\/p>\n

The big reason is oil. Goldman said the U.S.-Iran agreement has reduced downside risk to its economic outlook.<\/p>\n

Its commodities strategists now see Brent crude at $80 a barrel by the end of 2026, though the bank stressed that risks still run in both directions.\u00a0<\/p>\n

More Economy:<\/strong><\/p>\n

    \n
  • JPMorgan sends another message on strait of Hormuz, oil prices<\/strong><\/li>\n
  • Warren Buffett has a message on energy prices for all Americans<\/strong><\/li>\n
  • Goldman Sachs sends strong message on next Fed rate cut<\/strong><\/li>\n<\/ul>\n

    Oil flows could recover sluggishly if tensions around the Strait return, while a near-term glut could also develop if supply is released quickly into an already oversupplied market.<\/p>\n

    Goldman also nudged its second-half GDP growth forecast to 2%, citing lower gasoline prices, higher real income, AI-related equity wealth, and solid capital spending.<\/p>\n

    On the flip side, Goldman expects real consumer spending growth of just 1.5%, and payroll gains are expected to slow from an 188,000 three-month pace to just below its 60,000 breakeven estimate.<\/p>\n

    Key numbers behind Goldman\u2019s recession-risk reset<\/strong><\/h2>\n
      \n
    • Goldman\u2019s main shift is its recession call<\/strong>: It cut the 12-month U.S. recession probability from 25% to 15%, back to the long-term norm as oil-shock risks eased.<\/li>\n
    • Oil <\/strong>is the driver behind the reset. Goldman now sees Brent crude at $80 a barrel by the end of 2026, reducing the threat from the Iran shock.<\/li>\n
    • Growth <\/strong>improved, but only slightly. Goldman raised its second-half GDP forecast to 2%, helped by cheaper gas, AI wealth effects, and strong capex.<\/li>\n
    • Consumers <\/strong>remain the weak spot. Goldman expects real consumer spending growth of just 1.5% as temporary tax-related support fades.<\/li>\n
    • The labor market<\/strong> looks softer under the surface. Goldman expects payroll growth to slow from a 188,000 three-month pace to just below its 60,000 breakeven estimate.<\/li>\n
    • Inflation <\/strong>may cool enough for the Fed to wait. Goldman sees core CPI averaging 0.17% over the next three months, though core PCE could stay stickier.
      \nSource: Goldman Sachs note titled \u201cGlobal Views: More Crude, Less Concern\u201d.\u00a0\n<\/li>\n<\/ul>\n

      What lower gas prices mean for consumers and inflation<\/strong><\/h2>\n

      Lower gasoline prices offer the economy a lot more breathing room.<\/p>\n

      The bank argued that the steep drop in gas prices so far in June will help push down seasonally adjusted consumer prices.\u00a0<\/p>\n

      For perspective, energy was the primary driver of the inflation problem in the latest CPI report. In May, the CPI energy index rose 3.9%, gasoline prices jumped 7%, and energy accounted for more than 60% of the monthly increase in headline CPI.<\/p>\n

      Related: Hot May CPI sticks a pin in Fed rate-cut bets<\/strong><\/p>\n

      To add to that, AAA showed the national average for regular gasoline at about $3.92 a gallon on June 25, down from roughly $4.51 a month earlier. That gives consumers some cash-flow relief just as higher prices, borrowing costs, and fading tax-related support are pressuring spending.<\/p>\n

      Nevertheless, there\u2019s still plenty to consider with the inflation story.<\/p>\n

      The latest PCE report showed headline inflation running at 4.1% year over year in May, while core PCE rose 3.4%. That keeps the Fed cautious even if pump prices fall.<\/p>\n

      That said, Goldman\u2019s argument is that cheaper gas can quickly cool headline inflation, support real income, and reduce recession risk.\u00a0<\/p>\n

      What investors should watch next as Fed risk returns\u00a0<\/strong><\/h2>\n

      The Goldman Sachs note also makes it clear that the Fed has become a bigger market risk.<\/p>\n

      The bank said the first FOMC meeting under Chairman Kevin Warsh was more hawkish than expected.\u00a0<\/p>\n

      Half of the officials submitting projections penciled in at least one rate hike this year, while Goldman\u2019s baseline remains no hikes if inflation cools and growth stays muted.<\/p>\n

      A lower recession risk normally supports stocks, but a more hawkish Fed can quickly offset that by keeping borrowing costs elevated, pressuring housing, slowing hiring, and making growth stocks (trading at nosebleed levels) harder to justify.<\/p>\n

      Earlier in the cycle, investors were focused on when rate cuts would arrive. Now, as I covered this week, BofA expects three hikes this year, while Deutsche Bank expects two.\u00a0<\/p>\n

      The next test is whether falling energy prices cool inflation fast enough to keep the Fed on hold.<\/p>\n

      Related: 5-star analyst sets jaw-dropping AMD stock price target<\/strong><\/p>\n

      #Goldman #Sachs #revamps #recession #odds #oil #shock #fades<\/p>\n","protected":false},"excerpt":{"rendered":"

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