Recession Odds Hit 35% Because Of Tariffs, Goldman Warns

Forbes - Mar 31st, 2025

Goldman Sachs has significantly revised its economic predictions for the U.S., citing President Donald Trump's aggressive tariff policies as a major factor. In a recent note to clients, Goldman economists, led by Ronnie Walker, forecasted an increase in the average tariff rate to 15% on all goods this year. This shift comes as Trump prepares for a tariff "Liberation Day," aiming for higher levies than previously anticipated. The bank now estimates a 35% chance of a recession in the next year, up from 20%, and has adjusted its forecast for GDP growth to a mere 1%, the lowest since 2020. Consequently, Goldman has also reduced its expectations for stock market performance, predicting a 5% decline in the S&P 500 over the next three months.

This development highlights growing concerns among economists about the potential adverse effects of Trump's trade policies on the U.S. economy. The likelihood of increased inflation due to tariffs could impact the Federal Reserve's approach to interest rates, affecting borrowing costs and consumer demand. Trump's administration, including Treasury Secretary Scott Bessent, acknowledges the risk of recession, attributing it to unsustainable economic growth. Critics, however, argue that the administration's tariff strategy may unnecessarily lead to an economic downturn. Financial markets remain wary, as persistent high prices could hinder further interest rate cuts, complicating economic recovery efforts.

Donald Trump Federal Reserve Inflation Stock Market Tariffs Goldman Sachs U.S. Economy Recession Risk

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RATING

7.2

Fair Story

Consider it well-founded

The article provides a well-researched and timely analysis of Goldman Sachs' economic forecasts and the potential impact of President Trump's tariff policies. It excels in accuracy and source quality, drawing from reputable institutions and experts. However, it could improve in balance by incorporating a wider range of perspectives, particularly those in favor of the tariffs. The technical nature of the content may limit its accessibility to a general audience, but it remains relevant to public interest due to its focus on economic policies affecting a broad spectrum of society. Overall, the article is a valuable contribution to the discussion on trade and economic strategy, with room for enhanced transparency and engagement.

Accuracy

The story accurately reports Goldman Sachs' revised economic forecasts, including the increased recession probability from 20% to 35% and adjustments to inflation, GDP growth, and unemployment predictions. These figures align with available data from credible sources, indicating a high level of factual accuracy. However, the article could benefit from more precise citations or direct quotes from Goldman Sachs' reports to enhance verifiability. While the article correctly states President Trump's tariff intentions, it should be noted that such political plans are subject to change and require ongoing verification.

Balance

The article primarily presents the viewpoint of Goldman Sachs and economists critical of President Trump's tariff policies, potentially skewing the narrative towards a pessimistic economic outlook. While it mentions the administration's perspective on tariffs being a reaction to unsustainable economic growth, it lacks a thorough exploration of alternative economic views or potential benefits of the tariffs. Including more diverse perspectives, such as those of business leaders or trade experts who may support the tariffs, would provide a more balanced view.

Clarity

The article is generally well-structured and presents information in a logical sequence, making it easy to follow. However, some technical economic terms and forecasts could be better explained for a general audience. The tone remains neutral, but the complexity of the subject matter might still pose a challenge for readers without a background in economics.

Source quality

The article relies on Goldman Sachs, a reputable financial institution, as its primary source, which enhances its credibility. The inclusion of expert opinions, such as those from UCLA Anderson School of Management, adds further authority. However, the article would benefit from more diverse sources, including direct statements from government officials or other economic analysts, to provide a comprehensive view of the situation.

Transparency

The article provides a clear overview of Goldman Sachs' forecasts and the potential economic impact of tariffs, but it lacks detailed explanations of the methodologies behind these predictions. There is limited disclosure of any potential conflicts of interest or biases in the sources cited. Greater transparency regarding how the forecasts were derived and the potential motivations behind various economic opinions would enhance the article's trustworthiness.