Low recession risk, faster growth, and unemployment at a 70-year low - here are Goldman Sachs' predictions for the US economy in 2020

Goldman's economists say that "a year of above-trend growth should mean another year of solid job creation."

They expect nonfarm-payroll growth to stay above the 100,000 break-even point and the unemployment rate to continue to trend downwards. The bank is forecasting unemployment to hit 3.25% by the end of 2020, which it says is the lowest rate since the Korean War.

Wage growth should also rise by about 3.5% as shown in the graph above, with those on lower incomes set to gain the most.

After delivering three rate cuts this year, the Fed seemed to indicate that it "would need to see a really significant move up in inflation that's persistent before we even consider raising rates to address inflation concerns." As a result of this, the bank expects fund rates to remain unchanged in 2020.

Earlier this year, the bank's economists put the risk of a US recession within the next 12 months at one-in-three. Now it's cut the odds to one-in-five.

"The current expansion is now the longest in US business cycle records dating to the 1850s, and some recession fears may simply reflect an instinctive sense that its time is nearly up," the economists said.

"This has not been an unreasonable thought historically, as the two usual late-cycle risks—inflationary overheating and financial imbalances—often did grow over time. But so far both risks look limited," they added.

Goldman says next year's elections are "likely to be the single biggest event for financial markets in 2020." The bank will be keeping a very keen eye on what happens in the next year.

According to Goldman, it's going to be a tight race. Usually the incumbent stays in office, it said, but "President Trump's net negative approval rating makes the White House a close call, as prediction markets currently imply."

There could be changes for the Senate too according to the bank. "Prediction markets currently imply a 36% probability of a Democratic majority in the Senate. In light of the fact that outcomes of competitive Senate seats and presidential elections are correlated, this is probably also close to the implied probability of unified Democratic control."

If one of the four frontrunners for the Democrats does win the election (Bernie Sanders, Joe Biden, Pete Buttigieg and Elizabeth Warren) then Goldman says it's likely the federal corporate income tax rate will be upped from 21% back towards 35%. Goldman says this will "reduce S&P 500 earnings in 2021 by 11%" if it goes all the way back to 35%.