Goldman Sachs economists dramatically revised their US recession forecast within minutes, demonstrating the volatile nature of economic predictions amidst shifting trade policies. On Wednesday (April 9) noon, Goldman Sachs predicted a recession following the implementation of new reciprocal tariffs. “We think the White House is unlikely to quickly reverse most of the new tariffs, but our probability of recession would decline if it does,” Goldman Sachs economists led by Jan Hatzius said Wednesday in a note.
“This would be less severe than most past US recessions, in part because we do not see major financial imbalances that need to unwind, private sector balance sheets remain strong, and we see some room for trade deals to eventually lower tariff rates somewhat,” Hatzius wrote.
Goldman Sachs' note recalling Recession alarm
"Prior to President Trump's announcement, we had shifted to a recession baseline due to the newly enacted tariffs," stated the Goldman Sachs team, led by Jan Hatzius, in a Wednesday note. "We are now reverting to our previous non-recession baseline forecast."
Shortly before 1 PM ET, Goldman Sachs estimated a 65% probability of a US recession within 12 months.
However, at 1:18 PM ET, President Donald Trump announced a 90-day pause on reciprocal tariffs exceeding 10%, excluding those on Chinese goods, causing a market surge. Goldman Sachs subsequently released a revised note at 2:10 PM ET, retracting their recession prediction.
"This announcement maintains existing tariffs and the 10% minimum 'reciprocal' tariff, and we still anticipate additional sector-specific tariffs at 25%," they explained. "The cumulative effect of these tariffs is likely to align with our previous projections."
“This would be less severe than most past US recessions, in part because we do not see major financial imbalances that need to unwind, private sector balance sheets remain strong, and we see some room for trade deals to eventually lower tariff rates somewhat,” Hatzius wrote.
Goldman Sachs' note recalling Recession alarm
"Prior to President Trump's announcement, we had shifted to a recession baseline due to the newly enacted tariffs," stated the Goldman Sachs team, led by Jan Hatzius, in a Wednesday note. "We are now reverting to our previous non-recession baseline forecast."
Shortly before 1 PM ET, Goldman Sachs estimated a 65% probability of a US recession within 12 months.
Goldman Sachs’ research department publishing these two headlines 73 minutes apart lmao pic.twitter.com/45TJplzU9I
— litquidity (@litcapital) April 9, 2025
However, at 1:18 PM ET, President Donald Trump announced a 90-day pause on reciprocal tariffs exceeding 10%, excluding those on Chinese goods, causing a market surge. Goldman Sachs subsequently released a revised note at 2:10 PM ET, retracting their recession prediction.
"This announcement maintains existing tariffs and the 10% minimum 'reciprocal' tariff, and we still anticipate additional sector-specific tariffs at 25%," they explained. "The cumulative effect of these tariffs is likely to align with our previous projections."
Goldman Sachs takes back recession forecast from two hours ago. What a wild day ... pic.twitter.com/x9TaUffLLY
— James Pethokoukis ⏩️⤴️ (@JimPethokoukis) April 9, 2025
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