The US economy looks increasingly like it can avoid recession despite the Fed's rate hikes, Goldman Sachs says

Despite the Federal Reserve's interest rate hikes, the US economy looks like it will avoid a recession.

Goldman's analysts, led by chief economist Jan Hatzius, said in a note Monday that there are "encouraging signs" that the Fed can engineer what has become known as a soft landing.

Since March, the Fed has raised interest rates by 2.25 percentage points. After back-to-back 75 basis point increases, the central bank's target interest rate is 2.5%.

The Fed's rate hikes will cause a recession in the US, according to some economists. There is a chance of a mild US recession within the next year, according to Goldman.

The investment bank said it was seeing signs of improvement in the economy. According to the investment bank, growth is likely to remain below trend over the next year, but it doesn't appear to be too worrying.

According to the bank's analysts, the recent fall in energy prices is supporting people's incomes. The housing market is slowing down.

There are signs that the pressure on the labor market is decreasing. The increase in the number of people rejoining the labor force in July is a sign that the upward pressure on wages is going to slow.

The recent news on US inflation has been good for the bank.

They said that lower commodity prices, a stronger dollar, and improvements in supply chain disruptions all suggest that goods price inflation will continue to abate.

Inflation in the service sector is likely to be slower due to high rents. They think the rate of price rises will slow down.

The Fed is expected to raise its interest rate by 50 basis-point in September. The team said there's a good chance the Fed could raise rates more aggressively.