Goldman Sachs warns: Tariff impact + dual weakness in consumption and investment may cause U.S. Q4 GDP growth to plummet to 1.1%

According to the Zhitong Finance APP, Goldman Sachs warns that the U.S. economy may further lose momentum in the coming quarters, as the recently released employment report shows that the pressure from tariffs is intensifying. Goldman Sachs predicts in a report that the U.S. Gross Domestic Product (GDP) is expected to grow only 1.1% year-on-year in the fourth quarter of 2025, far below the bank's estimated potential growth level of 2%.

Goldman Sachs Chief Economist Jan Hatzius pointed out that domestic demand in the U.S. is weak, with consumer spending expected to grow only 0.8% in the second half of this year, while consumer spending is typically a major driver of the U.S. economy. Slowing job growth, rising prices due to new tariffs, and planned cuts to government assistance programs are all expected to put pressure on household spending.

Before Goldman Sachs released this report, the U.S. non-farm payrolls for July, announced last Friday, showed an increase of only 73,000 jobs, far below expectations, and the non-farm payrolls for May and June were both significantly revised down. President Trump subsequently announced the dismissal of the Director of the U.S. Bureau of Labor Statistics, Erika McEntarfer, accusing her of "manipulating employment data for political purposes."

These data collectively reflect that Trump's tariff policy has led to increased business uncertainty, thereby dragging down the economy. Starting next week, tariffs faced by most countries will rise to double-digit levels.

Goldman's report suggests that Trump may also need to prepare for more bad data this year. Business investment is expected to decline at an annualized rate of 0.6%, partly because companies are beginning to cut spending after pre-purchasing equipment ahead of tariff increases. Jan Hatzius added that investment will also be weighed down by "policy uncertainty and concerns about the economic outlook."

Although consumer and business spending are expected to remain weak, Goldman Sachs' report notes that corporate inventory replenishment and a narrowing trade deficit may provide some support to the overall U.S. GDP in the short term. Goldman Sachs expects the trade deficit to shrink from 3.1% of GDP at the end of 2024 to 2.4% at the end of 2025, as high tariffs may reduce imports, while a weaker dollar and limited retaliatory measures from other countries help support U.S. exports