Goldman has lowered its recession forecast for the US economy to 20% on the basis of strong retail and employment data.

After reviewing last week's retail sales and jobless claims data, Goldman Sachs economists have revised their forecast for a US recession in the next year, cutting the probability from 25% to 20%. This optimistic forecast is based on recent positive economic indicators that show the resilience of the US economy.

In their Saturday client note, Goldman's chief economist, Jan Hatzius, and her team further noted that they could potentially cut the recession probability to 15% if the August 6th employment report turns out well. This probability level has been stable for some time and could be further revised on August 2nd.

The US stock market, which had recently experienced a sharp decline, rebounded to its best performance so far this year, thanks to a series of positive economic data. July retail sales posted the biggest gain since the beginning of 2023, while government data showed that the number of jobless claims fell to its lowest level since early July.

Moreover, Goldman's economists also expressed increased confidence in a 25-basis-point rate cut at the Fed's September policy meeting. They noted that while there is a possibility of a more aggressive 50-basis-point cut triggered by an unexpected decline in the August 6th employment data, a 25-basis-point cut currently seems more likely.

In summary, Goldman's analysis suggests that while the economy faces some uncertainties, the current economic data and expected policy adjustments provide support for a stable growth in the US economy. These positive signals have given investors confidence and injected life into the market.