- The US has an 85% chance of avoiding a recession in the next year, according to Jan Hatzius.
- The chief economist of Goldman Sachs pointed to resilient growth in the US economy.
- The odds of a recession have fallen to what they are any given year, he estimated.
The US will most likely avoid a hard landing in the next year, according to Goldman Sachs' Jan Hatzius.
Speaking to CNN on Wednesday, the chief economist of the investment bank estimated the US has now just 15% chance of tipping into a recession in the next twelve months. That would be considered the "average" probability the economy slips into recession any given year, he said, given that the US has historically seen a recession once every seven years.
"I'm pretty confident," Hatzius said of the odds the US will avoid a hard landing over the next year.
Hatzius was among the few economists on Wall Street who predicted the US would avoid a recession in 2022 as the Fed hiked rates at a historic pace to fight inflation. But more forecasters have recently piled into the soft landing camp, thanks to inflation cooling while economic growth remains resilient.
Consumer prices have eased dramatically from their highs in the summer of 2022, with inflation clocking in at 3.2% in February. That disinflation could set the Fed up to cut interest rates up to five times in 2024, Hatzius previously predicted, a move experts say would fuel economic growth and stock prices.
Meanwhile, real GDP growth is expected to be 2.1% this quarter, according to the Atlanta Fed's GDPNow forecast. Hiring also remains strong, with the economy adding 275,000 jobs in February, per the Bureau of Labor Statistics.
That's making it look more and more likely the Fed has engineered a miracle: bringing down inflation from a 23-year high without crushing the economy.
Economists are now pricing in just a 39% chance the US will tip into a recession in the next year, according to a January survey conducted by The Wall Street Journal. Investors, meanwhile, are expecting inflation to fall back to the Fed's 2% target within the next year, according to the Cleveland Fed.
Hatzius acknowledged there were several unlikely "wild cards" that lay ahead, which could bring a negative shock to the economy. Those include black swan events and spreading geopolitical tension, which could result in shocks to commodities and transport prices.
"So far, what we've seen falls well short of the sort of shock that would create a recession," he said.
Hatzius, who was also among the few on Wall Street who foresaw the 2008 Financial Crisis, has repeatedly sounded bullish on the economy over the last year. AI advancements and weight loss drugs like Ozempic could help fuel economic growth in the coming years, he said previously.