Goldman Sachs has raised its recession probability for the U.S. over the next 12 months from 20% to 35%, citing growing uncertainty over trade policy, declining consumer and business confidence, and a lower growth baseline. The investment bank has also adjusted its forecasts for 2025, highlighting significant risks stemming from more aggressive reciprocal tariffs under President Donald Trump.
Key Drivers of the Revised Outlook

Trade Policy Uncertainty:Goldman Sachs has increased its U.S. tariff assumptions—now expecting a tariff rate of 15% in 2025. The anticipated new round of tariffs, with reports suggesting up to 20% duties on major U.S. trading partners, is expected to elevate input costs and disrupt trade flows, contributing to a weaker economic environment.

Inflation Pressures:The forecast now projects core personal consumption expenditures (PCE) inflation to rise to 3.5% by the end of 2025, significantly above the Federal Reserve’s 2% target. Higher tariffs are seen as a key factor driving up prices, thus intensifying inflationary pressures.

Economic Growth Slowdown:With these factors in play, Goldman Sachs has revised its 2025 U.S. gross domestic product (GDP) growth forecast downward to 1%, compared to prior estimates of 1.5%. This slowdown is linked to the combined impact of trade-related disruptions, softer consumer spending, and reduced business confidence.

Shifting Risk Landscape
Goldman Sachs analysts note that the downgrade in growth expectations, coupled with worsening sentiment among households and businesses, reflects a broader willingness within the White House to accept near-term economic weakness in pursuit of long-term policy objectives. The bank’s updated forecast is a stark reminder that aggressive trade measures can have far-reaching consequences for economic stability.
For those looking to track these macroeconomic trends and monitor key metrics such as inflation, GDP growth, and tariff impacts, insights can be found via the Economic Indicators endpoint.

Goldman Sachs’ revised outlook underscores a more challenging economic landscape for the U.S. in the coming year, as heightened tariff policies and persistent inflation risks contribute to a higher probability of recession and slower overall growth.