Goldman Sachs Lowers U.S. Recession Odds Post-Tariff Truce; Raises GDP Expectations
Goldman Sachs has become the first major Wall Street firm to lower its U.S. recession probability from 45% to 35% following Monday’s unexpected announcement of a 90-day tariff truce with China. This development has also led Goldman to slightly upgrade its 2025 GDP growth outlook by 0.5 percentage points to 1%.
Main Highlights
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Recession Odds Reduction: Lowered to 35% from 45% due to improved trade conditions.
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GDP Growth Revision: Changed from 0.5% to 1.0% annualized quarterly growth.
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Federal Reserve Rate Adjustments: Now anticipates just one rate cut by December 2025 (down from three), with two additional cuts foreseen in March and June of 2026 as monetary policy shifts from “insurance” to “normalization.”
“Growth appears sturdier, unemployment has not risen as feared, and the need for monetary support is lessened,” Goldman stated.
Details of the Tariff Truce
During discussions in Geneva, it was agreed to:
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Reduce U.S. Tariffs on China: Cut to 30% from 145%
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Decrease China Duties on U.S.: Slashed to 10% from 125%
This agreement lifted market sentiment across risk assets, providing relief for corporate earnings.
Monitoring Federal Reserve Rate Indicators
Investors eager to align their strategies with the Fed’s updated rate path can follow upcoming monetary policy meetings, including Goldman’s forecast for a December cut, utilizing the Economics Calendar API, which tracks Fed announcements and crucial economic data in real-time.
What to Watch Going Forward
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U.S. Inflation Metrics: Surprises in CPI or PCE readings could still impact Fed normalization estimates.
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Upcoming Earnings Reports: Companies will provide updates regarding the effect of tariff relief on margins.
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Trade Negotiation Updates: Observers should keep an eye on ongoing discussions regarding the truce; deeper tariff cuts could positively affect growth forecasts.
By synchronizing Goldman Sachs’ revised recession odds with real-time policy updates, investors can adeptly position their portfolios for a landscape influenced by trade relationships, economic growth, and monetary policy.
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