The US economy is facing a growing risk of recession due to surging tariffs, which could stunt growth and reignite inflation. Goldman Sachs has increased the chances of a recession in the next 12 months from 20% to 35%. The bank also revised its inflation estimate, now expecting core inflation to reach 3.5% by the end of the year.
The Trump administration’s trade policies have intensified concerns among economists and investors. President Donald Trump has announced plans to impose tariffs on all countries, not just those with significant trade imbalances with the US. This move is seen as a sharp departure from previous negotiations, which had focused on matching tariffs dollar-for-dollar on a limited number of countries.
Goldman Sachs now expects average US tariff rates to rise by 15 percentage points in 2025, up from 10 points earlier this month. The bank warns that higher tariffs will boost consumer crises, eating into inflation-adjusted income. The firm has also revised its forecast for GDP growth to just 1% in 2025.
The prospect of a recession is a growing concern, with many economists now considering it a 50/50 call. Goldman Sachs’ increased recession probability highlights the risks posed by the escalating trade tensions and their impact on household and business confidence.
Source: https://edition.cnn.com/2025/03/31/business/recession-tariffs-goldman-sachs/index.html