Goldman Sachs and JPMorgan Warn: Recession Risk Rises Amid Financial Tightening and Trade Tensions
Goldman Sachs has raised its outlook on the likelihood of a U.S. recession, while also bringing forward its expectations for when the Federal Reserve might begin cutting interest rates.
The investment bank revised its forecast for U.S. economic growth in the fourth quarter of this year down to 0.5%, compared to a previous estimate of 1%. It also increased the probability of a recession in the world’s largest economy over the next 12 months to 45%, up from 35%.
This shift comes amid a backdrop of tightening financial conditions, reduced foreign consumer demand, and escalating political uncertainty—all factors that Goldman Sachs believes could lead to a sharper-than-expected decline in capital spending.
Similarly, JPMorgan raised its global and U.S. recession risk on Friday evening to 60%, reflecting growing concerns about economic headwinds. S&P Global also adjusted its U.S. recession forecast upward, now seeing a 30–35% chance, up from 25% in March.
Adding to the pressure, sweeping tariffs imposed by President Donald Trump earlier in the week have rattled global markets. China responded on Friday with retaliatory tariffs on American goods, fueling fears of an escalating trade war and contributing to heightened financial market volatility.
