Via Goldman Sachs economists:
We still see a 35% probability that the US economy will enter a recession in the next 12 months. This is more than double the unconditional probability in any given 12-month period because
- inflation is far above target,
- the Fed is tightening aggressively,
- and we live in an exceptionally uncertain world in terms of both domestic US politics and geopolitics.
However, our 35% recession probability is well below the 60-70% consensus in the latest Wall Street Journal forecaster survey because we still see a very plausible four-step path from the high-inflation economy of the present to a low-inflation economy of the future without a recession.
The steps include
a) bringing growth down to below-trend but positive rates,
b) rebalancing the labor market with only a limited increase in unemployment,
c) reducing wage growth to more sustainable levels,
and d) putting PCE inflation on a path back down to 2%.