REPORT: Goldman Sachs raises probability of U.S. recession as total bankruptcy filings surge nearly 25 percent

According to the Straits Times, analysts at Goldman Sachs have increased the likelihood of a recession in the coming months from 15 percent to 25 percent, citing a sharp rise in unemployment figures last month. Goldman Sachs raised the likelihood of a recession from 15% to 25%, citing a sharp rise in unemployment figures last month. But the bank believes that a timely rate cut by the Federal Reserve will help get the U.S. job market back on track.

“Our forecast is predicated on the assumption that job growth will resume in August and that the Federal Open Market Committee (FOMC) will judge a 25 basis point rate cut to be sufficient to address any downside risks. If we are wrong and the August jobs report is as weak as the July report, then a 50 basis point rate cut could be in order for September.”

The labor market is not the only sector feeling the effects of the Fed's “long-term rate hike” policy.

Epiq AACER, a provider of U.S. bankruptcy data, revealed in a press release that the total number of bankruptcy filings in the country increased 24 percent from 35,727 in July 2023 to 44,427 last month.

We continue to see strong and steady growth in bankruptcy filings across the board, reflecting the ongoing financial pressures facing businesses and individuals, said Michael Hunter, vice president of Epiq AACER. Based on current trends and economic indicators, I expect bankruptcy filings to continue to grow steadily through the remainder of 2024 and into 2025.