Goldman Sachs warns against recession in the USA. The bank lowers GDP growth forecast

In the opinion of the Goldman Sachs investment bank, the risk of recession in the US is now greater than previously assumed and amounts to 45 percent. This is caused by the bank – including the persistent increase in uncertainty of economic policy and foreign consumer boycott.

At the same time, the bank reduced the American GDP growth forecast in quarterly terms for the 4th quarter of this year. up to 0.5 percent with 1 percent Goldman Sachs also reduced the average annual US GDP growth forecast from 1.5 to 1.3 percent. This decision – as the bank said – was taken “as a result of a violent exacerbation of financial conditions, foreign consumer boycotts and the persistent increase in uncertainty of economic policy.” This uncertainty, as the bank assessed, will probably limit capital investments, more than previously assumed.

“This base forecast is still based on our current assumption that the effective customs rate in the US will increase by a total of 15 percentage points, which would now require a significant limitation of duties planned for April 9” – emphasized GS. He explained that if most of the duties planned for this day come into force, the effective customs rate will increase by about 20 pp, then the bank's forecast for recession may change.

In the current base scenario, which assumes no recession, Goldman Sachs shares three percentage rateseach 25 base points, starting from June. “In the case of recession, we would expect reductions by about 200 PB in the next year,” he added.

Experts of the Investment Bank drew attention to three factors that deteriorated their prospects for economic growth in the USA. “First of all, the financial conditions have exacerbated much more than we expected, in response to the announcement by the White House + mutual duties and to the announcement by the Chinese government of retaliation for exports from the US. This is partly due to the fact that both ads were more aggressive than expected” – they explained.

As a second element, they indicated a decrease in the number of foreign tourists visiting the USA and consumer boycoty. Both indicate “lowering GDP growth in 2025 by 0.1-0.2 pp”. They explained that their previous analysis assumed a retaliation response of foreign governments, but did not take into account the “bottom -up effects of consumer activities”.

The last factor – as they conveyed – are indicators of uncertainty of economic policy, which “increased rapidly to levels much higher than during the previous trade war” from 2018. “The effects of uncertainty will probably be much higher than before, because much more American companies may be affected by uncertainty related to ZO with a much wider range of American and foreign duties, and some companies may also feel the effects of uncertainty in other areas of politics, such as fiscal or immigration policy, “the bank's experts pointed out. (PAP)

JLS/ Mick/