Goldman Sachs Cuts U.S. Recession Odds to 35% Amid Trade Progress and Market Easing

Goldman Sachs Cuts U.S. Recession Odds to 35% Amid Trade Progress and Market Easing

By Tredu.com5/13/2025

Tredu

economic outlooktrade policyfinancial marketsGoldman Sachs
Goldman Sachs Cuts U.S. Recession Odds to 35% Amid Trade Progress and Market Easing

Goldman Sachs Cuts U.S. Recession Risk to 35% as Trade Tensions Ease and Markets Stabilize

Goldman Sachs has revised its outlook for the U.S. economy, reducing the probability of a recession within the next 12 months to 35%, down from the previous estimate of 45%. The revision follows encouraging signs of de-escalation in U.S.-China trade tensions and a notable easing of financial conditions in recent weeks.

In a report released this week, Goldman economists pointed to the recent temporary trade agreement between the United States and China as a key factor in their improved outlook. The agreement is expected to result in a smaller-than-expected increase in the effective tariff rate, offering relief to businesses and markets that have been navigating heightened trade uncertainty for months.

Further trade developments are also expected. The Trump administration is reportedly on track to announce additional early trade deals in the coming weeks, which would further reduce the effective U.S. tariff rate and potentially provide a continued boost to investor confidence and economic activity.

As a result of these developments, Goldman Sachs has raised its forecast for U.S. economic growth in 2025 by 0.5 percentage points to 1.0%. Additionally, the bank now expects the Federal Reserve to begin cutting interest rates later than previously projected, shifting the anticipated start of rate reductions from July to December.

The combination of improved trade prospects, lower recession risk, and easing financial conditions marks a notable shift in sentiment for the U.S. economic outlook, though risks tied to global demand and geopolitical tensions remain on the radar.

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