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Goldman Sachs<\/a> Group Inc. economists increased the probability of a US recession in the next year to 25% from 15%, but said there are several reasons not to fear a slump even after unemployment jumped.\u00a0<\/p>\n \u201cWe continue to see recession risk as limited,\u201d the Goldman economists led by Jan Hatzius said in a report to clients on Sunday.\u00a0<\/p>\n The economy continues to look \u201cfine overall,\u201d there are no major financial imbalances and the Federal Reserve has a lot of room to cut interest rates and can do so quickly if needed, they said.<\/p>\n Last week ended with US jobs data showing that\u00a0hiring<\/a>\u00a0had slowed markedly in July and unemployment had risen to the highest in almost three years, raising concerns of a slowdown and fears the Fed has waited\u00a0too long<\/a>\u00a0to cut interest rates.\u00a0<\/p>\n Goldman\u2019s Fed forecasts are less aggressive than\u00a0those<\/a>\u00a0of JPMorgan Chase<\/a> & Co. and Citigroup<\/a>. Hatzius\u2019s team expects the central bank will reduce its benchmark by 25 basis points in September, November and December. By contrast, JPMorgan and Citigroup revamped their forecasts to predict policymakers will deliver a half-point cut in September.\u00a0<\/p>\n \u201cThe premise of our forecast is that job growth will recover in August and the FOMC will judge 25bp cuts a sufficient response to any downside risks,\u201d the Goldman Sachs economists said. \u201cIf we are wrong and the August employment report is as weak as the July report, than a 50bp cut would be likely in September.\u201d<\/p>\n The economists added that they are skeptical the labor market is at risk of deteriorating rapidly in part because job openings indicate demand remains solid and there has been no obvious shock to spark a downturn.<\/p>\n<\/div>\n\nRecommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. Subscribe Now<\/a>.<\/div>\n<\/div>\n