Goldman Sachs is out with a note titled “Countdown to Recession.”
Goldman Sachs has lowered its U.S. growth outlook and raised the probability of a recession, warning that a confluence of tighter financial conditions, growing global backlash, and surging policy uncertainty could weigh more heavily on the economy than previously expected.
In a note to clients, the bank trimmed its 2025 Q4/Q4 GDP growth forecast to just 0.5%, down from earlier estimates, and lifted its 12-month recession probability from 35% to 45%.
The downgrade reflects what Goldman describes as a “sharp tightening in financial conditions,” alongside foreign consumer boycotts and heightened policy unpredictability that is expected to curb capital spending more than initially projected.
“This baseline forecast still assumes a 15 percentage point increase in the effective U.S. tariff rate,” the economists wrote. “For that to hold, a substantial rollback of the tariffs currently scheduled to take effect on April 9 would be required.”
Should most of those tariffs proceed as planned, Goldman estimates the effective tariff rate could rise by 20 percentage points once additional sector-specific measures are included — even factoring in the possibility of limited country-specific exemptions.
“If that scenario materializes,” the note added, “we would revise our forecast to include a recession.”
The stark warning underscores Wall Street’s growing unease over the economic impact of the Trump administration’s aggressive trade posture, particularly as markets adjust to a more uncertain investment climate heading into the second half of 2025.
