Economists at Goldman Sachs Group Inc. have raised their estimate of the likelihood of a recession in the United States.
In a research note dated last Sunday, April 6, economists led by Jan Hatzius lowered their forecast for US gross domestic product (GDP) growth for 2025. In their opinion, the mentioned indicator in the current year in the United States will show an increase of 0.5%. The previous version of the forecast provided for US GDP growth of 1% in 2025.
Goldman Sachs experts also increased the probability of a 12-month recession in the United States economic system from 35% to 45%. The economists noted that their new vision follows a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty that is likely to depress capital spending by more than they had previously assumed.
At the same time, Goldman Sachs experts said that their baseline forecast is still based on the assumption that the effective US tariff rate will increase by 15 percentage points in total. It is worth noting that this indicator can become a reality only if tariffs are significantly reduced, which are due to come into force on April 9. They underlined that if most of the mentioned measures do take effect, the effective tariff rate will increase by 20 percentage points. According to them, some agreements on easing the terms of trade cooperation between individual countries at a later date will not be an obstacle to the implementation of this scenario.
Goldman Sachs economists said that in the current non-recession baseline, they expect the Federal Reserve to make three consecutive decisions on 25-basis point insurance cuts. According to them, in a recession scenario, they would expect the US financial regulator to cut the mentioned indicator by about 200 basis points.
As we have reported earlier, JPMorgan CEO Says Donald Trump Tariffs to Boost Inflation.
