For the first time in two and a half years! Goldman Sachs is more pessimistic about the U.S. economy than the market
Goldman Sachs has lowered its 2025 U.S. GDP growth forecast from 2.4% to 1.7%. The downgrade is not due to recent data, but rather because the assumptions regarding trade policy have become more unfavorable, and government management is addressing expectations of economic weakness caused by tariffs. It is expected that the average tariff rate in the U.S. will increase by 10 percentage points this year, which is double the previous forecast and about five times the increase during Trump's first term
Goldman Sachs has lowered its forecast for U.S. GDP growth in 2025 from 2.4% at the beginning of the year to the current 1.7%, for the following reasons:
The downgrade is not primarily due to recent data, as the employment report for February was strong, initial jobless claims remain low, and the ISM for February—along with our broader business survey tracker—remains close to recent averages, while reports of significantly weak tracking data for first-quarter GDP have been greatly exaggerated.
Instead, the reason for the downgrade is that our assumptions about trade policy have become more unfavorable, and the government is managing expectations regarding recent economic weakness caused by tariffs.
We currently expect the average tariff rate in the U.S. to rise by 10 percentage points this year, which is double our previous forecast and about five times the increase during Trump's first term.
