Is the U.S. Economy Out of the Woods?

Goldman Sachs’s top economist Jan Hatzius has a few words to say about the U.S. economy, and they may not be what you would expect; he told clients that the United States will not fall back into recession in a research note circulated on Sunday.

His note, seen by MarketWatch, pursued two distinct lines of thought.

First, Hatzius outlined the financial firm’s economic forecast for the next two years. “Our baseline forecast remains unchanged,” he wrote, referring to Goldman’s expectation for slow growth throughout most of 2013. Growth will be limited as the economy continues to struggle to find balance in the aftermath of the fiscal cliff compromise’s tax increases and government spending cuts, which caused some financial uncertainties. But eventually, private sector improvement will offset these negative growth drivers, and this year’s limited economic growth will be followed by “substantial acceleration in 2014” as fiscal policy becomes more neutral…