Goldman Sachs analysts have revised their forecast for a U.S. recession in 2025, now estimating it at 35%, reduced from 45%. This change follows a recent agreement on a U.S.-China tariff pause. The firm also improved its GDP growth prediction for the year by 0.5 percentage points to 1.0% and adjusted the timeline for Federal Reserve rate cuts.

Economic Impacts of the Trade Deal

On Monday, Washington and Beijing reached a consensus to halt most tariffs for 90 days. This move decreased U.S. tariffs on Chinese imports from 145% to 30% and reduced China’s duties on U.S. goods from 125% to 10%. As a result, the agreement has:

• Lessened the negative impact on trade volumes and overall business sentiment.

• Mitigated potential inflationary pressures related to import costs.

• Bolstered expectations for consumer and corporate expenditures.

Goldman analysts note that with reduced trade tensions, the risk of a recession has decreased significantly.

Fed Rate Cut Forecast Adjustments

Supported by a brighter growth outlook and controlled inflation, Goldman Sachs now anticipates:

• Three rate cuts by the Fed in 2025-2026

  • December 2025 (moved from July)

  • March 2026

  • June 2026

• A transition in policy rationale from “insurance” to “normalization” based on robust growth and stable labor markets.

Goldman’s peers, including Citigroup (NYSE: C), have also adjusted their rate-cut expectations, aligning with broader shifts in monetary policy timing.

Monitoring Key Economic Indicators

Investors seeking insight into the impact of trade policies and Fed decisions can rely on key macroeconomic data—such as GDP revisions and unemployment reports—by accessing resources available on entreprenerdly.com, which provides real-time economic forecasts and schedules.

Future Considerations

• Keep an eye on Q2 GDP revisions and personal consumption metrics to confirm Goldman’s upgraded predictions.

• Watch for Fed communications for any indications of a potential rate adjustment in December.

• Evaluate sector rotation as interest rate expectations evolve.