In the turbulent world of trade wars, Goldman Sachs has again adjusted its recession forecast, demonstrating the uncertainty hovering over Wall Street. This time, it reversed back to the probability it saw several hours ago.
On Wednesday, the bank adjusted its recession probability for the third time after President Donald Trump declared a temporary halt on new tariffs for 90 days. This announcement prompted Goldman to lower its latest recession probability, which had been raised earlier the same day to 60%.
The bank’s economists now estimate a 45% chance of a recession occurring in the next year, aligning with previous predictions made last week. However, Trump’s recent move does not suspend all tariffs. During this temporary pause, the President confirmed via Truth Social that a 10% flat tariff would still be in place. Additionally, he noted that tariffs on Chinese imports would rise to 125%.
Just less than a week ago, Goldman Sachs increased its 12-month recession probability from 35% to 45%. Analysts at the bank had been poised to revise their outlook to a recession being the baseline scenario had Trump proceeded with implementing new tariffs on Wednesday. The situation underscores the volatility and swift changes affecting economic forecasts amid ongoing trade disputes.
