Goldman Sachs(US:GS) 慧甚FactSet·2025-12-11 02:57Core Viewpoint - The Federal Reserve is expected to announce a 25 basis point interest rate cut during its December meeting, with a high probability of 88.6% according to CME data, indicating a shift towards a more accommodative policy environment due to declining inflation and signs of cooling employment [1]. Group 1: Inflation Trends - The PCE price index for September showed a month-on-month increase of 0.3% and a year-on-year increase of 2.8%, which is better than the previous value of 2.7% [3]. - The core PCE price index also rose by 0.2% month-on-month and 2.8% year-on-year, slightly lower than the previous year's 2.9%, indicating a stable inflation environment that supports the case for monetary policy easing [3]. - Overall, consumer spending has stagnated, reflecting financial strain among Americans prior to the government shutdown, which further supports the argument for a more lenient monetary policy [3]. Group 2: Employment Market Dynamics - The latest ADP employment data indicates an average weekly addition of 4,750 jobs in private enterprises, showing improvement from previous negative growth, but highlights significant structural disparities, particularly affecting small businesses [4]. - Small businesses experienced a net job loss of 120,000 in November, while larger firms added approximately 90,000 jobs, indicating a troubling trend for the overall employment landscape [4]. - The non-farm payroll data for September showed an addition of 119,000 jobs, exceeding expectations, but the unemployment rate rose to a four-year high of 4.4%, suggesting underlying weaknesses in the labor market [5]. Group 3: Interest Rate Cut Expectations - Goldman Sachs has indicated that a December rate cut is "basically a done deal," with market pricing reflecting a probability exceeding 85%, driven by labor market slowdowns and risk management needs [6]. - The report emphasizes that despite strong non-farm job additions, rising unemployment and increased layoffs signal a weakening labor structure, supporting the case for a "preventive rate cut" to mitigate economic slowdown risks [6]. - Looking ahead, fiscal policies, such as infrastructure and industrial stimulus measures, are expected to drive economic growth, with projections of U.S. economic growth remaining in the 2%–2.5% range [6].