Goldman Sachs Estimates 45% Chance of US Recession
Goldman Sachs has heightened the likelihood of a recession in the United States, cautioning that President Donald Trump’s extensive new tariffs are constraining financial conditions and impacting investment. In a research note titled ‘US Daily:...
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Goldman Sachs has heightened the likelihood of a recession in the United States, cautioning that President Donald Trump’s extensive new tariffs are constraining financial conditions and impacting investment.
In a research note titled ‘US Daily: Countdown to Recession’ released on Monday, Goldman increased the probability of an economic downturn within the next year to 45%, a rise from 35% the previous week. Additionally, it revised its 2025 growth forecast for the U.S. economy downward from 1.0% to 0.5%.
This adjustment comes on the heels of Trump’s April 2 announcement of a minimum 10% tariff on all imports, alongside “reciprocal” duties ranging from 11% to 50% aimed at numerous countries that he described as having unfair trade imbalances. The EU is expected to face a 20% tariff, while China will see a 34% tariff once the increases take effect on April 9. In response, Beijing has already declared reciprocal tariffs on U.S. goods, and various nations have condemned the actions, pledging countermeasures.
Goldman analysts explained the revision by stating, “Financial conditions tightened more aggressively than we had expected in response to the White House’s announcement of its ‘reciprocal’ tariff and the Chinese government’s announcement of its retaliatory tariffs.” They further noted that “a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty” following the tariff announcements would “likely depress capital spending by more than we had previously assumed.”
The bank's projections are based on the possibility that the U.S. may retract some tariffs following discussions with trade partners this week. However, they warned that “if most of the April 9 tariffs do take effect… we expect to change our forecast to a recession.”
Other analysts have echoed similar concerns, with several investment banks increasing their recession risk predictions last week. JPMorgan assessed the probability of both a U.S. and global recession at 60%, labeling the “disruptive” U.S. tariff policies as “the biggest risk to the global outlook all year.”
Billionaire investor Bill Ackman shared this sentiment in a post on X on Sunday, characterizing the tariffs as an “economic nuclear war” that could “destroy confidence in our country as a trading partner, as a place to do business, and as a market to invest capital.” He cautioned that, “We are heading for a self-induced, economic nuclear winter, and we should start hunkering down.”
Trump, however, defended his tariffs while aboard Air Force One on Sunday, asserting that “Sometimes you have to take medicine to fix something,” and promised to “solve the deficit problem that we have with China, with the EU, and other nations.”
Lucas Dupont for TROIB News
In a research note titled ‘US Daily: Countdown to Recession’ released on Monday, Goldman increased the probability of an economic downturn within the next year to 45%, a rise from 35% the previous week. Additionally, it revised its 2025 growth forecast for the U.S. economy downward from 1.0% to 0.5%.
This adjustment comes on the heels of Trump’s April 2 announcement of a minimum 10% tariff on all imports, alongside “reciprocal” duties ranging from 11% to 50% aimed at numerous countries that he described as having unfair trade imbalances. The EU is expected to face a 20% tariff, while China will see a 34% tariff once the increases take effect on April 9. In response, Beijing has already declared reciprocal tariffs on U.S. goods, and various nations have condemned the actions, pledging countermeasures.
Goldman analysts explained the revision by stating, “Financial conditions tightened more aggressively than we had expected in response to the White House’s announcement of its ‘reciprocal’ tariff and the Chinese government’s announcement of its retaliatory tariffs.” They further noted that “a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty” following the tariff announcements would “likely depress capital spending by more than we had previously assumed.”
The bank's projections are based on the possibility that the U.S. may retract some tariffs following discussions with trade partners this week. However, they warned that “if most of the April 9 tariffs do take effect… we expect to change our forecast to a recession.”
Other analysts have echoed similar concerns, with several investment banks increasing their recession risk predictions last week. JPMorgan assessed the probability of both a U.S. and global recession at 60%, labeling the “disruptive” U.S. tariff policies as “the biggest risk to the global outlook all year.”
Billionaire investor Bill Ackman shared this sentiment in a post on X on Sunday, characterizing the tariffs as an “economic nuclear war” that could “destroy confidence in our country as a trading partner, as a place to do business, and as a market to invest capital.” He cautioned that, “We are heading for a self-induced, economic nuclear winter, and we should start hunkering down.”
Trump, however, defended his tariffs while aboard Air Force One on Sunday, asserting that “Sometimes you have to take medicine to fix something,” and promised to “solve the deficit problem that we have with China, with the EU, and other nations.”
Lucas Dupont for TROIB News
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