The U.S. economy has shown signs of surprising resilience this year, but concerns over inflation,

recession, and the Fed's path are still looming. So where is the economy headed from here?

We continue to have a more optimistic view on our prospects for

achieving a soft landing and avoiding a recession than consensus. We recently

lowered our 12-month recession probability to 25 percent because we felt like we've seen enough in terms of the

labor market rebalancing to feel more optimistic that that can be accomplished

without a recession. I'm Allison Nathan and this is Goldman Sachs exchanges.

To help stood light on the state of the U.S. economy and drivers and risks for the second half of the year,

I'm sitting down with my colleague in Goldman Sachs research, David Miracle, our chief U.S. economist.

David, welcome back to the program.

Thanks, Allison.

It's good to be here.

David, recession fears still appear to be looming large in the U.S.

Give us an update of how the U.S. economy is doing and whether those fears seem warranted at this point

Sure, we've been on the optimistic side of this debate since early in 2022, but at the beginning of it, we hadn't seen very much about how the rebalancing of the

labor market that we thought we did indeed need to solve the inflation problem and avoid a recession

would go. Now I think we actually know a lot,

and it makes me a lot more confident

than I could have been at the outset.

At the outset of the feds hiking cycle,

we did indeed have an overheated labor market.

And in fact, our jobs workers workers gap which is just the difference

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