Goldman Sachs ups recession probability to 35% as 'Liberation Day' tariffs loom

The chance of a recession is quickly rising, according to one of America's biggest banks

Goldman Sachs says the probability of a U.S. recession in the next 12 months is now at 35%

That's after pegging the likelihood at 20% less than a month ago

The bank says its recession projection increase reflects their lower growth baseline

the sharp recent deterioration of household and business confidence, and statements from White House officials indicating greater willingness to tolerate near-term economic

in pursuit of their policies. The White House messaging on a possible downturn was somewhat sporadic in March

There's going to be no recession in America. Are you expecting a recession this year

I hate to predict things like that. There is a period of transition because what we're doing is very big

We're bringing wealth back to America. That's a big thing. And there are always periods of it takes a little time It takes a little time It takes a little time Will these policies be worth it if they lead to a recession even a short recession

These policies are the most important thing America has ever had. So it is worth it

It is worth it. A, I don't think the only reason there could possibly be a recession is because of the Biden nonsense that we had to live with

Goldman's latest recession projection comes days before. Liberation Day. We have Liberation Day, as you know, on April 2nd

Many countries have taken advantage of us, the likes of which nobody even thought it was

possible for many, many decades, for decades. And, you know, that has to stop

Wednesday's Liberation Day is when President Donald Trump plans to roll out the latest

round of tariffs. While the rollout is not set in stone, Goldman is expecting reciprocal tariffs averaging 15

to cross-U.S. trading partners. The conference boards Consumer Confidence Index fell for the fourth straight month in March Meanwhile the Expectations Index which looks at consumers short outlook for income business and labor market conditions

dropped to its lowest level in 12 years. Goldman Sachs says in a note, while sentiment has been

a poor predictor of activity over the last few years, we are less dismissive of the recent

decline because economic fundamentals are not as strong as in prior years

Meanwhile, the price index for core personal consumption expenditures, the Fed's preferred inflation measure, was up 2.8% in February from the previous year

Goldman increased its PCE forecast for 2025 to 3.5%. At the same time, the bank downgraded its economic growth estimates to 1%

Recession predictions have been picking up in recent weeks. Earlier this month, UCLA's Anderson School of Management issued a recession watch

They said if Trump proposals are fully or nearly fully enacted it could contract enough sectors to trigger a recession in the next year or two Fed Chair Jerome Powell was asked about this latest assessment after the central bank last policy meeting If you look at outside forecasts forecasters have generally raised a number of them have

raised their possibility of a recession somewhat, but still at relatively moderate levels

you know, still in the region of the traditional, because they were extremely low. If you go back two months, people were saying that the likelihood of a recession was extremely low

So has moved up, but it's not high. The latest estimate from the Atlanta Fed's GDP forecaster has the U.S. contracting 2.8% in the first quarter of 2025

Remember, a recession is generally called when there are two consecutive quarters of negative economic growth

But the final official decision comes from the National Bureau of Economic Research and is usually done in hindsight

The U.S. economy grew at an annual rate of 2.4% in the fourth quarter of 2024

For SAN, I'm Simone del Rosario. For more unbiased news on the economy, tariffs, and politics, download the SAN app