Mon Apr 07 05:22:56 UTC 2025: ## Goldman Sachs Raises US Recession Probability to 45% Following Tariff Announcement

**New York, April [Date of Publication]** – Goldman Sachs economists have significantly increased their prediction of a US recession, citing the Trump administration’s recent tariff announcements as a key contributing factor. In a research note released on April 6th, the firm raised its 12-month recession probability to 45%, up from 35%. This upward revision follows a marked tightening of financial conditions, foreign consumer boycotts, and heightened policy uncertainty, all of which are expected to negatively impact capital spending.

The economists, led by Jan Hatzius, lowered their 2025 GDP growth forecast to 0.5% from 1%. Their baseline scenario assumes a 15-percentage-point increase in the effective US tariff rate, contingent on significant reductions to tariffs scheduled for April 9th. However, if the majority of these tariffs are implemented as planned, the effective tariff rate could rise by 20 percentage points, prompting Goldman Sachs to revise its forecast to include a recession.

This increased recession probability has also influenced Goldman Sachs’s interest rate projections. In their baseline (non-recession) forecast, the firm now expects the Federal Reserve to initiate three consecutive 25-basis-point rate cuts beginning in June (previously July), bringing the federal funds rate down to 3.5-3.75%. However, should a recession occur, Goldman Sachs anticipates the Fed cutting rates by approximately 200 basis points over the next year. The firm’s probability-weighted forecast currently suggests 130 basis points of rate cuts this year, aligning with market pricing as of Friday’s close.

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