Goldman Sachs Lowers U.S. Recession Probability to 30%
On Thursday, Eastern Time, Goldman Sachs released its latest economic forecast, reducing the likelihood of a U.S. recession in the next 12 months from 35% to 30%. The bank pointed out that the main reason for this adjustment is the easing uncertainty surrounding the Trump administration's tariff policies.
Goldman Sachs' analysis suggests that recent trade negotiations between China and the U.S. have surpassed market expectations, reducing the risk of extreme trade conflicts, which has alleviated Wall Street's concerns about the U.S. economic growth prospects to some extent.
U.S. GDP Growth Forecast Slightly Raised
Goldman Sachs not only lowered the recession risk but also slightly raised its projection for U.S. GDP quarterly growth in 2025, from an initial 1% to 1.25%. Although the increase is modest, it indicates growing confidence in the resilience of the U.S. economy within the context of a high-tariff policy framework.
Analysts pointed out that this change reflects how some Wall Street institutions are beginning to reassess the actual impact of Trump's economic policies, suggesting the U.S. economy might be more resilient than previously thought.
Uncertainty Over Tariff Policies is Easing
Since President Trump announced the implementation of "reciprocal tariffs" on "Liberation Day" on April 2nd this year, global markets have experienced significant turbulence, with investors concerned that high tariffs would raise U.S. inflation levels and potentially hinder economic growth.
However, in recent weeks, dialogues between the U.S. and its major global trade partners have progressed, showing signs of flexible adjustments to some aggressive tariff measures, which have eased market sentiment.
Goldman Sachs noted in its report that data so far indicate the new round of tariffs by the Trump administration seems to have a lesser direct impact on U.S. consumer prices than initially feared by the market.
Inflation Impact Yet to Fully Materialize, Further Data Needed
Although current data does not indicate severe inflationary pressures, Goldman Sachs remains cautious. The bank noted that the data sample used to evaluate tariff impacts is limited and cannot lead to definitive conclusions. More data related to inflation and consumption will be needed in the coming months to verify whether the U.S. economy can remain stable under tariff shocks.
The U.S. Consumer Price Index (CPI) for May showed a 0.1% month-over-month increase, below economists' expectations of 0.2%. This result provided a short-term positive for the market. However, Goldman Sachs warned that the potential impact of Trump's tariffs has not yet fully translated to end-price levels, and future CPI might rise due to increased costs of imported goods.
Investors Focused on Data and Policy Interactions
Currently, U.S. financial markets are closely monitoring two main trends: the actual implementation and negotiation progress of the Trump administration's trade policies, and whether changes in inflation and employment data in the coming months will alter the Federal Reserve's policy path.
Goldman Sachs emphasized that while the recession probability has decreased, it does not mean the risks have been fully eliminated. Instead, following the short-term easing in market sentiment, there is a need to be vigilant about uncertainties that could arise from upcoming data fluctuations.
