Goldman Sachs Reduces U.S. Recession Odds to 30%

Goldman Sachs has revised down its forecast for the likelihood of a U.S. recession over the next 12 months from 35% to 30%, citing reduced uncertainty over trade policies following a new agreement between the United States and China.

The updated outlook comes after negotiators from Washington and Beijing reached a framework aimed at resolving ongoing tariff disputes. The agreement includes the removal of Chinese restrictions on rare earth metal exports and provisions allowing Chinese students to continue enrolling in American universities.

Markets responded positively to the news, easing fears of an economic downturn that had been fueled by the so-called “Liberation Day” tariffs imposed by President Donald Trump on April 2. These tariffs had previously shaken global financial markets and heightened concerns about a potential recession.

Goldman Sachs noted that recent U.S. inflation data suggests the impact of tariffs on consumer prices has been less severe than initially expected, although the evidence remains limited. Consumer prices rose less than anticipated in May, but further increases are likely in the coming months as existing tariffs continue to affect supply chains.

The bank also pointed out that financial conditions in the U.S. have largely returned to pre-tariff levels, reflecting a stabilization in the broader economic environment.

In light of these developments, Goldman Sachs has raised its forecast for U.S. GDP growth in 2025 from 1% to 1.25%.