In a forecast that contains both good and bad news, Goldman Sachs has predicted three Federal Reserve interest rate cuts this year but also a 35% chance of recession for the United States within the next 12 months.
See the tweet below!
According to the prediction, President Trump’s strategic tariffs, aimed at shielding U.S. jobs and invigorating domestic manufacturing, now face blowback on economic growth.
Goldman Sachs economists have adopted a more cautious stance, projecting three Federal Reserve interest rate cuts throughout the year.
Major reductions are expected in July, September, and November.
These cuts underscore the rising economic anxieties attributed to global trade tensions.
Goldman’s updated prediction is not without merit. The probability of a U.S. recession now rests at 35%, with tariffs playing a destabilizing role in economic growth.
This forecast aligns with widespread concerns that President Trump’s actions, albeit aimed at strengthening the economy, could harbor unintended global repercussions.
The potential for “insurance” rate cuts carries more weight now, as economists argue that the downside risks prompted by tariffs have grown significantly.
Their concerns lie in the greater-than-expected impact these trade measures could have on market dynamics and public confidence.
“We continue to believe the risk from April 2 tariffs is greater than many market participants have previously assumed,” said the Goldman Sachs economists led by Jan Hatzius, cited by Yahoo Finance.
The adverse effects of tariffs are manifesting through declining household and business confidence and a slowdown in real economic growth.
Goldman bumped up its recession odds from 20% to 35%, raising questions about potential consequences on core PCE inflation now forecasted to hit 3.5% by the end of 2025.
The sober outlook extends to GDP, with growth projections dropping to a mere 1% on a Q4/Q4 basis.
This marks the worst since 2020, fueling fears that protective measures might stunt more than safeguard economic prosperity.
President Trump’s 25% tariff on imported cars highlights this strategic pivot, emphasizing efforts to fuel U.S. manufacturing and jobs.
As inflation forecasts rise and the Federal Reserve rethinks its interest rate strategies, it remains to be seen if these trade maneuvers will defuse long-standing tensions or unintendedly catalyze a recession.
The stakes are high, with the S&P 500’s disappointing 6.3% decline in March further complicating matters.
“The downside risks to the economy from tariffs have increased the likelihood of a package of 2019-style ‘insurance’ cuts,” the forecast reads.
Despite these uncertainties, the path forward remains in the hands of policymakers and market forces.
President Trump’s vision for American resurgence hinges on the balance of strong domestic policies executed with strategic foresight.
WSJ headline this morning: "Goldman Sachs Lifts U.S. Recession Probability to 35%
The bank also lifted its year-end 2025 core PCE inflation forecast to 3.5% year-over-year while also lowering its 2025 GDP growth forecast to 1.0%"“The upgrade from our previous 20% estimate (of…
— fred hickey (@htsfhickey) March 31, 2025
