Goldman Sachs Lowers U.S. Growth Forecast from 2.4% to 1.7% due to Severe Tariff Impact

# Goldman Sachs Lowers U.S. Economic Growth Forecast Amid Trump Tariff Policy Goldman Sachs has revised its U.S. economic growth forecast downward, citing the intensifying impact of former President Donald Trump's tariff policies. According to Yahoo Finance, Goldman Sachs' economics team released a report on the 11th (local time) reducing the 2025 U.S. GDP growth rate projection from 2.4% to 1.7%. Chief Economist Jan Hatzius noted, "Trade policy is unfolding much more unfavorably than expected." This adjustment marks the first time in two and a half years that Goldman Sachs has presented a GDP growth rate lower than the Bloomberg consensus. Bloomberg's aggregate data anticipates this year's U.S. economic growth rate to be above 2%. # Tariff Hikes Spur Inflation and Curtail Investment Goldman Sachs forecasts that the average U.S. tariff rate will rise by 10 percentage points this year, double the previous estimates and five times higher than during Trump’s first term. Hatzius analyzed that these tariff increases would negatively impact the economy in three ways: a decline in real income due to rising consumer prices, financial market tightening, and reduced corporate investment. The likelihood of a recession is also increasing. Former PIMCO CEO Mohamed El-Erian predicted that the probability of a U.S. recession this year has risen to 25–30%, up from 10% before Trump's tariff policies commenced. Betting markets are reflecting this heightened recession risk. According to Polymarket, the probability of an official recession declaration by the end of the year has surged to 40%, up from 23% on the 27th of last month. # Fed Likely to Hold Rates Steady Goldman Sachs also projects that amidst the dual challenges of slowing economic growth and high inflation, the Federal Reserve might implement two rate cuts, one in June and another in December. However, given the enduring uncertainty of Trump's trade policies, Goldman Sachs sees a significant likelihood that the Fed will hold rates steady for the time being. Hatzius concluded, "The Federal Open Market Committee (FOMC) will maintain a cautious stance until the policy environment becomes clearer."