Is the US economy on the brink of a recession? Goldman Sachs thinks so—and the odds are rising fast.
Goldman Sachs has just sounded the alarm, raising the probability of a US recession in the next 12 months to 35%—up from its previous estimate of 20%.
The reasons? Plummeting business and consumer confidence, shaky economic fundamentals, and signs that the White House might tolerate short-term economic pain to push through policy goals.
Tariffs and Inflation: A Dangerous Mix
The investment bank also hiked its 2025 US tariff projections to 15%, warning that this could spike inflation.
Their forecast? Core PCE inflation could hit 3.5% by year-end—far above the Federal Reserve’s 2% target. Higher tariffs mean pricier imports, which could squeeze household budgets even more.
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Growth Slows, Unemployment Rises
Goldman Sachs isn’t optimistic about growth either. It slashed its 2025 GDP forecast from 1.5% to just 1.0%, citing trade tensions and weak early-year data.
Worse, unemployment is expected to climb to 4.5% as businesses grapple with uncertainty. The first quarter of 2025 already looks grim, with GDP growth tracking at a meager 0.2%.
If these predictions hold, Americans could face higher prices, slower wage growth, and fewer jobs. While recessions aren’t inevitable, the warning signs are hard to ignore.
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