Goldman revises recession risk

Goldman Sachs raised its 12‑month U.S. recession probability to about 30% from roughly 25% in its most recent outlook, citing an oil‑driven shock, a softer labor market and waning fiscal support as the drivers of the change. (cnbc.com) The bank also materially lifted its oil assumptions — raising its 2026 Brent average to about $85 a barrel and modeling Brent at roughly $105 in March and $115 in April under a scenario that assumes six weeks of Strait of Hormuz disruption. (bloomberg.com) (finance.yahoo.com) U.S. labor data that helped prompt the reassessment showed nonfarm payrolls fell by 92,000 in February 2026 and the unemployment rate rose to 4.4%, according to the Bureau of Labor Statistics. (bls.gov) Financial markets reacted with a sharp repricing: the 10‑year Treasury yield climbed toward the mid‑4% area (about 4.39% on March 20) as traders pushed short‑term yields higher on inflation fears. (cnbc.com) (tradingeconomics.com) Market odds of Fed easing in 2026 have largely evaporated — Bloomberg reports bond traders have “scrapped” the popular cut trades, and market‑implied trackers show much lower probabilities for a 2026 rate cut across the coming FOMC meetings. (bloomberg.com) (rateprobability.com) Other forecasters have moved in step: Moody’s Analytics’ model puts the 12‑month recession probability near 48.6% while several wealth managers and banks have lifted odds into the 40%–50% range, highlighting a broad repricing of risk across macro models. (cnbc.com) Despite the upgrade in recession risk, Goldman’s note still left the probability of avoiding a downturn above 50% — the firm has signaled its baseline assumes a slowdown rather than an immediate, deep contraction while policymakers and markets weigh sticky inflation and energy volatility. (thestreet.com)