W.H. Economic Adviser Bernstein: Goldman Sachs’ Projection of 35% Recession Risk Is ‘a Very Careful Piece of Work’

On Monday’s broadcast of Bloomberg’s “Balance of Power,” White House Council of Economic Advisers member Jared Bernstein said that while he doesn’t want to give the probability of a recession, Goldman Sachs’ projection that there’s a 35% chance of a recession in the next two years, “looked like a very careful piece of work.”

Bernstein stated, “I’m not going to give a probability. I don’t think that would be appropriate. You can look at all the market shops with their different probabilities. I was just reading a Goldman Sachs report this morning. It looked like a very careful piece of work. They — not us, they — put the probability at 15% in the next 12 months, 35%, I believe, over the next 24. That’s Goldman Sachs, and that’s just one of many different market predictions out there.”

He continued, “Look, I think the thing that’s getting missed in this recession probability discussion is the extent of tailwinds in the current economy. Now, obviously, the labor market is a big piece of that. Friday, a report came out that was kind of overlooked, and this was on state employment and unemployment rates. 17 states are posting their lowest unemployment rate on record. I think we all have to recognize the strength of the job market as a significant tailwind to this economy, providing income gains to working Americans. Household balance sheets are in very strong shape. That’s also something that, by the way, factored into those Goldman Sachs probabilities. You really have to look at the extent of savings and net worth among households in the aggregate to understand the macroeconomic tailwinds that help push back on some of the very real headwinds that are also in play.”

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