Goldman Cuts U.S. Recession Odds to 35% After Tariff Truce, Lifts 2025 GDP Outlook

Goldman Sachs became the first major Wall Street firm to trim its U.S. recession probability—to 35% from 45%—after Monday's surprise 90-day tariff truce with China. The move also prompted Goldman to nudge its 2025 quarterly GDP growth forecast up by 0.5 percentage point to 1%.

Key Takeaways

• Recession Odds: Reduced to 35% vs. 45% previously, thanks to a softened trade backdrop.

• 2025 GDP Upgrade: From 0.5% to 1.0% annualized quarterly growth.

• Fed Rate Cuts: Now sees only one cut in December 2025 (down from three), with two more in March and June 2026 as policy shifts from “insurance” to “normalization.”

“Growth remains firmer, unemployment has risen less than feared, and the urgency for support is reduced,” Goldman wrote.

Tariff Truce Details

In Geneva, officials agreed to:

• U.S. Tariffs on China: Slashed to 30% from 145%

• China's Duties on U.S.: Cut to 10% from 125%

The deal lifted sentiment across risk assets and provided breathing room for corporate earnings.

Tracking Fed Rate Signals

Investors looking to time and understand the Fed's evolving rate path can monitor upcoming policy meetings—including Goldman's newly penciled-in December cut—via the Economics Calendar API, which lists all Fed announcements and major data releases in real time.

What to Watch Next

1. U.S. Inflation Data: Any surprises in CPI or PCE readings could still derail Fed normalization plans.

2. Earnings Season: Companies will update on whether tariff relief is translating into margin improvements.

3. Trade Negotiations: Watch for extension or expansion of the tariff truce; deeper cuts could further buoy growth forecasts.

By blending Goldman's recalibrated recession odds with real-time policy calendars, investors can better position portfolios for a year where trade, growth, and monetary policy remain in delicate balance.