Goldman Sachs raises US recession risk to 45%

Goldman Sachs has increased the likelihood of a US recession within the next 12 months to 45 per cent, citing escalating trade tensions and tighter financial conditions. The investment bank joined many institutions in revising their forecasts as global markets react to new tariffs imposed by US President Donald Trump.

The updated forecast marks a significant jump from Goldman’s previous estimate of 35 per cent. The bank attributed the shift to a sharp tightening in financial conditions and rising policy uncertainty, which it expects will lead to a deeper slowdown in capital spending than previously anticipated.

The revision comes just weeks after Goldman had already raised its recession probability from 20 per cent to 35 per cent, warning that U.S. economic fundamentals had weakened compared to prior years.

Other major banks have also sounded the alarm. JPMorgan, for instance, recently placed the probability of both a US and global recession at 60 per cent, highlighting mounting concerns over the impact of protectionist policies on economic growth.

Attribution: Reuters
Subediting: M. S. Salama