Earlier this month, Goldman Sachs had raised the probability of a U.S. recession to 25% from 15%, driven by a rise in the unemployment rate, which hit a three-year high in July, sparking fears of an economic downturn.

In a note released on Saturday, Goldman Sachs’ chief U.S. economist, Jan Hatzius, stated, “We have now shaved our probability from 25% to 20%, mainly because the data for July and early August released since August 2 shows no sign of recession.”

Hatzius further explained that if the U.S. economy continues to expand, it would resemble other G10 economies, where the Sahm rule has held less than 70% of the time.

The latest jobless claims report, released on Thursday, indicated that the number of Americans filing for unemployment benefits fell to a one-month low in the previous week. Additionally, separate data showed that retail sales experienced their largest increase in 1.5 years in July.

Hatzius also mentioned that if the August jobs report appears “reasonably good,” he would likely reduce the U.S. recession probability further to 15%.

Despite this, Hatzius expects the Federal Reserve to cut interest rates by 25 basis points at its September meeting. However, he did not rule out the possibility of a 50 basis point cut if the jobs report fails to meet expectations.

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