Goldman's Gloom: U.S. Recession Probabilities Surge Amid Tariff Hikes

Goldman Sachs raised the likelihood of a U.S. recession to 35% amid President Trump's tariff policies affecting global markets. The economy's growth forecast lowered, anticipating multiple rate cuts from the U.S. Fed and ECB. Europe's outlook appears bleaker, with potential for a technical recession.

Goldman Sachs has significantly increased the chances of a U.S. recession to 35% from a previous 20%, driven by the economic repercussions of President Donald Trump's tariff measures. The global financial markets remain unsettled as these policies take hold.

The leading brokerage has also revised its GDP growth forecast for the world's largest economy, predicting a reduction to 1.5% from an earlier estimate of 2.0% by 2025. Additionally, Goldman anticipates three interest rate cuts from both the U.S. Federal Reserve and the European Central Bank by the end of the year.

While the U.S. braces for changes in trade policy, Europe faces an even grimmer economic future. Goldman warns that the eurozone might enter a technical recession in 2025, worsened by anticipated tariff increases, which could see the overall impact on euro area GDP reach up to 1.2% in a more adverse scenario.

(With inputs from agencies.)