Goldman Sachs Lowers 2025 GDP Forecast and Raises Recession Risk due to New Tariffs
Goldman Sachs, a leading global investment bank, recently shared some concerning economic predictions with its clients. In a note sent on Sunday, the bank’s analysts announced a reduction in their forecast for Gross Domestic Product (GDP) growth in the year 2025. This downward revision comes as a response to the Trump administration’s latest round of tariffs.
Impact on the US Economy
According to the Goldman Sachs analysts, the new tariffs could potentially shave off 0.2 percentage points from the US GDP growth rate. This might not seem like a significant reduction at first, but it could have far-reaching consequences. The bank’s economists explained that this reduction in growth could lead to a decrease in business investment, as companies may become more cautious about expanding operations in an uncertain economic climate.
Moreover, the tariffs could result in higher prices for consumers. Goldman Sachs estimates that the average American household could end up paying an additional $800 per year due to these tariffs. This could lead to a decrease in consumer spending, which would further negatively impact economic growth.
Raised Recession Risk
The Goldman Sachs analysts also warned of an increased risk of a recession. They explained that the tariffs could lead to a trade war between the US and its major trading partners, potentially disrupting global supply chains. This disruption could lead to higher prices for goods and services, as well as decreased demand for exports. These factors, combined, could push the US economy into a recession.
Impact on the World
The ripple effect of these tariffs on the global economy could be substantial. Goldman Sachs predicts that other countries may retaliate with their own tariffs, leading to a global trade war. This could disrupt global supply chains, leading to increased prices for goods and services, as well as decreased demand for exports.
Moreover, the bank’s analysts warned of potential negative consequences for emerging markets. These countries could see a decrease in foreign investment, as investors become more risk-averse in the face of trade tensions. This could lead to a decrease in economic growth and an increase in debt levels in these countries.
Conclusion
In conclusion, the new tariffs announced by the Trump administration have led Goldman Sachs to revise their economic forecasts for 2025, with a lower GDP growth rate and an increased risk of a recession. The impact of these tariffs could be substantial, both for the US economy and for the global economy. Consumers and businesses may face higher prices, and there is a risk of a global trade war that could disrupt supply chains and decrease demand for exports.
- Goldman Sachs lowers 2025 GDP growth forecast due to new tariffs
- US economy may see decrease in business investment and consumer spending
- Risk of recession increased due to potential trade war
- Global economy could face disrupted supply chains and decreased demand for exports
