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Financial services firm Goldman Sachs has raised the probability of a recession in the United States to 45% in the next 12 months, joining other major investment banks in warning of rising risks after new tariffs announced by President Donald Trump, reported Reuters on Monday.
Goldman Sachs had earlier pegged the risk of a US recession at 35%. In its latest report, it said there was now an increased chance of a downturn due to a “sharp tightening in financial conditions and a rise in policy uncertainty that is likely to depress capital spending by more than what Goldman had previously assumed.”
Last month, Goldman Sachs had increased its recession risk to 35% from 20%, citing weakening economic fundamentals.
Financial services firm JPMorgan on Thursday also revised its odds of a global recession by the end of the year from 40% to 60%, following Trump’s announcement of sweeping new trade measures.
“Disruptive US policies has been recognised as the biggest risk to the global outlook all year,” said Bruce Kasman, JPMorgan’s chief global economist, in a research note to clients. “The latest news reinforces our fears as US trade policy has turned decisively less business-friendly than we had anticipated.”
Trump on Wednesday announced a minimum 10% tariff on most imported goods, which took effect on April 5. A separate 25% tariff on all foreign-made automobiles took effect on April 3.
In addition, the US government imposed reciprocal tariffs on dozens of countries, including a 26% “discounted” levy on India. The new tariffs have raised concerns about a broader trade war that could slow global growth and increase inflation.
“The effect … is likely to be magnified through [tariff] retaliation, a slide in US business sentiment and supply-chain disruptions,” JPMorgan said in the note, titled “There will be Blood,” as quoted by Reuters.
Barclays on Thursday forecast a contraction in the US gross domestic product in 2025, while Citi lowered its 2025 growth forecast to 0.1% and Union Bank of Switzerland to 0.4%, according to Bloomberg.
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