Goldman Sachs: Downgrades 2025 U.S. GDP growth forecast to 1.7%
Goldman Sachs has lowered its 2025 U.S. GDP growth forecast to 1.7%, citing unfavorable trade policy assumptions, and expects the average tariff rate in the U.S. to rise by 10 percentage points this year. Tariffs will weigh on economic growth by raising consumer prices, tightening financial conditions, and increasing uncertainty in trade policy. At the same time, the core PCE inflation rate is expected to accelerate to 3%. Among developed countries, interest rates may be further reduced. The latest stocks with a "Buy" rating include JD.com and Century Internet
According to the Zhitong Finance APP, Goldman Sachs has released a research report stating that it has lowered its 2025 GDP growth forecast for the United States from 2.4% at the beginning of the year to the current 1.7% (both based on fourth quarter/fourth quarter). This is the first time in two and a half years that the bank's forecast has fallen below expectations. The downgrade is attributed to the bank's trade policy assumptions becoming more unfavorable, with the government managing expectations of short-term economic weakness caused by tariffs. The bank now expects the average tariff rate in the U.S. to rise by 10 percentage points this year, which is double its previous forecast and about five times the tariff rate during Trump's first term.
Tariffs drag down economic growth through three main channels. First, for every 1 percentage point increase in the average U.S. tariff rate, tariffs raise consumer prices, thereby reducing real income by an estimated 0.1%. Second, tariffs tend to tighten financial conditions, although the impact of this cycle appears smaller than during the 2018-2019 trade war when measured by the scale of tariff increases. Third, uncertainty in trade policy leads businesses to delay investments. The bank now expects core PCE inflation to accelerate again to 3% later this year, nearly 0.5 percentage points higher than its previous forecast.
Under the leadership of Germany's new Chancellor Friedrich Merz, significant changes in Germany's fiscal policy may occur, improving the medium-term growth outlook for the Eurozone. Among developed countries, the bank expects that as underlying inflation recedes and U.S. tariffs exert pressure on economic growth—especially if the dollar continues to defy predictions of significant appreciation—interest rates in developed countries will be further lowered. In all major asset classes, the market has significantly deviated from the leading advantage of U.S. economic growth. Since the beginning of this year, the yield spread between U.S. and German 10-year government bonds has decreased by 72 basis points, European stock markets have outperformed U.S. stock markets by 14% in local currency terms, and the euro has appreciated by 5% against the dollar.
Latest "Buy" rated stocks: JD.com-SW (09618, JD.US) target price is $52/204 HKD; Century Internet (VNET.US) target price is $12.1