Goldman Sachs Adjusts Recession Forecast Amid Tariff Pause
Goldman Sachs has revised its economic outlook following President Donald Trump’s announcement of a 90-day tariff pause. This move has calmed markets that were previously worried about a trade war.
Initially, Goldman analysts predicted a recession due to new country-specific tariffs. However, after Trump’s statement, they changed their forecast to a “non-recession baseline.” They now expect modest GDP growth of 0.5% by Q4 2025 and anticipate three Fed rate cuts starting in June, as reported by CNBC.
Markets reacted positively. Bitcoin’s price climbed above $82,000, and the Nasdaq neared a 10% gain, recovering from its worst performance since 2008. The 10-year Treasury yield also dropped from 4.5% to 4.4%.
Trump, in a post on Truth Social, mentioned that several countries have started trade and currency talks. This led to the tariff pause and a temporary reduction of the reciprocal tariff rate to 10%. However, tariffs on Chinese imports increased to 125% promptly.
Goldman now sees a 45% chance of a recession and expects core inflation to peak at 3.5%. The surprise decision comes after four days of market volatility and recession fears. Treasury Secretary Scott Bessent will lead future trade talks, a move wall Street welcomes due to his moderate approach.
