Goldman Sachs now sees much higher odds of economy shrinking, hiking probability of a U.S. recession to 35%

Goldman Sachs has raised the probability of a U.S. recession to 35%, up from 20%, citing the economic strain from Trump’s tariffs, weakened consumer spending, and declining business confidence. The bank predicts the tariffs will cut GDP growth by 1.2 percentage points over the next year, prompting the Federal Reserve to implement three interest rate cuts despite rising inflation.
Some analysts, including Mark Zandi of Moody’s Analytics, warn of a potential “recession by design,” possibly orchestrated to lower bond yields amid a massive $6.7 trillion U.S. debt refinancing. Concerns are growing that higher interest rates could jeopardize debt sustainability, while the Trump administration argues tariffs are a necessary strategy to rebuild U.S. manufacturing.