Goldman Sachs has reversed its earlier recession forecast following President Donald Trump’s unexpected announcement of a 90-day pause on most new tariffs—a move that significantly eased investor concerns over a trade-driven economic slowdown.
Earlier in the day, Goldman analysts had shifted their outlook to a “recession baseline” in response to newly announced country-specific tariffs. However, after the White House rolled back implementation timelines for many of the measures, the firm quickly updated its stance to a “non-recession baseline,” now forecasting 0.5% GDP growth by Q4 2025 and anticipating three interest rate cuts by the Federal Reserve starting in June, according to CNBC.
Markets React to Temporary Relief
The markets responded positively to the de-escalation:
- Bitcoin surged above $82,000,
- The Nasdaq rebounded nearly 10%, recovering sharply from recent steep losses,
- The 10-year U.S. Treasury yield fell from 4.5% to 4.4%.
President Trump explained the tariff delay in a Truth Social post, stating that “multiple countries have engaged in trade and currency negotiations,” which led to a mutual agreement to scale reciprocal tariffs down to 10% for now. However, tariffs on Chinese imports were raised to 125%, taking effect immediately.
Goldman Sachs Adjusts U.S. Economic Outlook
In its revised note to clients, Goldman Sachs now places the probability of a U.S. recession at 45%, down from 60%+ earlier in the week. Analysts also forecast core inflation to peak at 3.5%, supporting expectations of a gradual easing cycle by the Federal Reserve.
Treasury Secretary Appointment Seen as Positive Signal
Goldman’s report also spotlighted the appointment of Scott Bessent as Treasury Secretary and lead trade negotiator—a development seen favorably by markets. Bessent, known for his moderate stance and pragmatic policymaking, is expected to help de-escalate tensions and provide more stability to upcoming trade talks.
