GS Now Predicts Three Cuts – Details

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In a critical prediction for the economy, Goldman Sachs economists now foresee a trio of Federal Reserve interest rate cuts this year in July, September, and November.

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These cuts aim to counteract the economic strain from President Donald Trump’s tariffs.

The probability of a U.S. recession has been increased to 35%, citing the detrimental impact of tariffs on economic growth.

Goldman Sachs has raised the U.S. recession risk to 35% due to mounting global trade conflicts.

This foreboding prediction stems from the ripple effects of increased tariffs set by President Trump, intended to bolster American industries.

The bank believes risks from the April 2 tariffs are more significant than predicted by many in the market.

The Federal Reserve may be forced to implement a round of “insurance” cuts due to these risks.

Goldman economists increased their 12-month recession probability to 35% from the previous 20%, highlighting deteriorating consumer and business confidence.

Goldman noted a subsequent downgrade of their GDP growth projection to 1% on a Q4/Q4 basis, the worst since 2020.

With the forecast for core PCE inflation climbing to 3.5%, the economic outlook grows gloomier.

Goldman Sachs economists, led by Jan Hatzius, emphasize, “the downside risks to the economy from tariffs have increased the likelihood of a package of 2019-style ‘insurance’ cuts.”

Goldman’s new outlook also includes a revised unemployment rate of 4.5% for 2025.

Goldman’s decision to lower its S&P 500 target from 6,500 to 5,900 underlines the volatility tariffs inject into the stock market.

The S&P 500 was already down 6.3% in March, marking its worst monthly performance since September 2022.

Economists warn stricter tariffs could unnecessarily lead the U.S. into a recession.

President Trump plans substantial import taxes on all countries to invigorate American manufacturing and secure jobs.

Supporters of the MAGA agenda might view this as a move to protect U.S. interests, but the question remains whether these measures will do more harm than good.

Inflation due to these tariffs threatens financial markets and could pressure the Fed to rethink its interest rate strategy, affecting consumer demand.

Americans need transparency and a solid strategy to navigate this challenging economic landscape, advocating once more for decisions rooted in America’s best interests.

“We continue to believe the risk from April 2 tariffs is greater than many market participants have previously assumed,” echoed Jan Hatzius and his team, cited by Yahoo Finance.