Goldman Sachs expects the economy to survive a recession, but is eyeing a few key indicators that will help tell the story ahead. The Wall Street firm again on Monday slashed its expectations for second-quarter GDP to 0.4%. At the start of the year, which saw GDP shrink by 1.6% in the first quarter, the new forecast puts the US with its head above the rule-of-thumb recession indicator for two consecutive quarters of negative growth. Goldman had earlier lowered its forecast to 0.7% last Thursday. While there is increasing risk, Goldman says the US is not currently in a recession, primarily due to a labor market that is still churning out strong job growth despite signs of a slowdown in other indicators. “We continue to see a 30% chance of entering a recession next year and roughly the same odds over the two-year horizon,” economist Ronnie Walker said in a client note. “But the softening of key indicators in June highlights the importance of monitoring downside risks more immediately.” Walker said it is unlikely that the National Bureau of Economic Research, the official arbiter for such matters, will call for a recession even if the first two quarters are negative. Three of the four most important NBER data points – payroll, real personal income and real GDP – are all now trending positive. However, several other key indicators, such as imports, consumer expectations and housing, have recently been moving in the other direction. In the note, Walker listed what he considers to be the best leading indicator for economic activity. Here they are the top 10 indicators: ISM New Order Index; The Consumer Confidence Reading Expectations component of the University of Michigan; ISM New Orders Minus Inventory; reading conference board requirements; ISM Manufacturing Index; Market Manufacturing PMI; Initial Jobless Claims; single family construction permit; Chicago Business Barometer; And the single family housing begins. Collectively, the most recent readings indicate a 2.2% drop in growth. However, in the last three months, they have grown by 0.6%. Walker noted that “the best-ranked series has slowed disproportionately in recent months.” The Atlanta Fed’s GDPNow tracker, which evaluates data on a rolling basis and tends to be more accurate at the end of the quarters, saw a 1.2% drop in growth in the second quarter. Goldman’s Walker said he thinks the model is too pessimistic on the impact of net trading. Exports are a subtraction from GDP, and the US was running a record deficit before the imbalance narrowed in the most recent readings. The US Bureau of Economic Analysis will release the first estimates of GDP for the second quarter on July 28.