Mon Apr 07 12:43:03 UTC 2025: ## Recession Fears Rise as Trade War Escalates: Goldman Sachs Raises US Recession Probability

**New York, April 7, 2025** – Growing concerns over an escalating trade war have prompted Goldman Sachs to significantly raise its prediction for a US recession. The investment bank now estimates a 45% chance of a recession, up from 35% earlier this week and a previous forecast of 20% just days ago. This increase follows President Trump’s announcement of steeper-than-expected tariffs, triggering a global market sell-off.

This pessimistic outlook is shared by other major financial institutions. At least seven leading investment banks have revised their recession forecasts upwards, with J.P. Morgan placing the probability of a US and global recession at a concerning 60%. The fear is that the tariffs will not only fuel US inflation but also provoke retaliatory measures from other countries, as evidenced by China’s response.

The escalating trade tensions have also led to downward revisions in economic growth projections. Goldman Sachs lowered its US growth forecast for 2025 to 1.3% from 1.5%, while J.P. Morgan anticipates a 0.3% quarterly contraction. These figures contrast with Wells Fargo Investment Institute’s (WFII) more optimistic, though still subdued, prediction of 1% growth.

In response to the deteriorating economic climate, expectations for Federal Reserve interest rate cuts have intensified. Goldman Sachs now anticipates three consecutive 25 basis point cuts, beginning in June, while J.P. Morgan predicts five cuts by the end of the year, pushing the benchmark policy rate down to 3%. WFII has also increased its rate cut forecast from one to three. Market traders, on average, are pricing in even more aggressive rate cuts.

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