Goldman Sachs Sees 15 PP Tariff Hike, Predicts Economic Strain

Goldman Sachs has revised its projections regarding U.S. tariffs, anticipating a significant increase of 15 percentage points due to reciprocal tariffs to be announced by President Trump. This adjustment raises concerns about inflation, with the firm predicting core inflation could rise to 3.5% by 2025, well above the Federal Reserve's target. Economic growth is expected to stagnate, with forecasts indicating an annualized growth rate of just 0.2% in the first quarter of 2025 and a full-year growth of only 1%. Additionally, Goldman Sachs has increased the likelihood of a recession occurring in the next 12 months to 35%, driven by weak consumer confidence and rising unemployment, projected to reach 4.5%. The expected economic landscape resembles stagflation, characterized by high inflation coupled with low growth. Overall, these changes reflect a more pessimistic outlook for the U.S. economy amidst rising trade tensions.