Goldman Sachs Group Inc. Economists assessed the possibility of their recession and brought forward the forecast time of the next US Federal Reserve Interest-Stere Cut after the Trump administration’s tariff announcement.
On 6 April, according to a research note, economists headed by Jan Hatzius reduced the forecast of their 2025 Q4-TO-Q4 GDP growth from 1% to 0.5% and increased the possibility of 12 months of recession from 35% to 45%.
This “in financial conditions follows a faster, foreign consumer boycott, and policy uncertainty, and the policy uncertainty is likely to suppress more capital expenses than before,” he said.
Economists said that their basic forecasts still remain on the assumption that the effective US tariff rate will increase by 15 per cent points, which would require a major decrease in the tariff prescribed to be effective on April 9.
If most of the April 9 tariffs are effective, they said, then the effective tariff rate will increase the estimated 20 points, once those growth and potential regional tariffs are likely to be effective, even some country-specific agreements allowed at the later date.
“If yes, we hope to turn our forecast into a recession,” he said.
In the base line of the current non-marvel, Goldman economists stated that they hopes that the Fed starts in June with a package of three consecutive 25-base point “insurance cuts”, which starts in July, earlier, reduces the fund rate by 3.5–3.75%.
“In the scenario of a recession, we would expect to cut the fed up to 200bp in the next year,” he said. “Our probability-loving Fed forecast means that this year is cut in 130bp rates this year (before 105bp, reflects our possibility of recession), similar to the market pricing as close to Friday.”
