Goldman Sachs, a major financial firm, is warning that President Trump’s tariffs could trigger a significant rise in inflation and increase the chances of a recession.
Inflation Concerns
The firm forecasts core inflation (excluding food and energy) to hit 3.5% this year. This is a full 1.5% above the Federal Reserve’s target of 2%, a significant jump from February’s 2.8%.
Recession Risk on the Rise
Goldman Sachs now estimates a 35% chance of a recession within the next year. This is a substantial 15% increase from their previous prediction. They also predict weaker economic growth and a rise in unemployment from 4.1% to 4.5%.
Trump’s Tariffs: The Likely Culprit
These gloomy predictions are largely attributed to President Trump’s tariffs. While the administration has sent mixed signals about the extent of these tariffs, Goldman Sachs anticipates an average 15% tariff across all US trading partners. However, they expect exceptions and exclusions to ultimately lower the average impact to around 9 percentage points.
Trump’s Response
President Trump, in a recent interview, acknowledged the possibility of a recession but emphasized the long-term benefits of his economic policies, prioritizing the building of a “strong country” over short-term market fluctuations.
Disclaimer: This information is for general knowledge and does not constitute financial advice. Consult with a financial professional before making any investment decisions.
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