Interview, Panel, Earnings Call, Investor Day
Will tariffs lead to a recession?
- Uncertainty in the tariff regime and unpredictable daily policy changes are identified as primary drivers for a likely U.S. recession, with Goldman Sachs assigning a 45% probability to this outcome.
- Goldman Sachs forecasts a baseline year-over-year growth rate of 0.5% for the fourth quarter to fourth quarter, expecting the average tariff rate to increase by approximately 16 percentage points.
- The severity of the recession hinges on consumer spending reactions to rattle perceptions and potential policy reversals, where immediate impacts could be severe if demand collapses.
- Economic damage visibility is expected to improve over the next couple of months, though short-term analysis faces challenges from data lags and distortions.
- Potential Federal Reserve responses include late but aggressive rate cuts if labor markets deteriorate significantly, potentially treating tariff-driven price increases as a permanent price level shift rather than inflation.
- Alternative perspectives suggest trade policies could stimulate investment and long-term outcomes despite short-term "rewiring" costs, lower equity valuations, and reduced access to cheap global labor.
- Business strategy is expected to shift toward significantly increased U.S.-based production regardless of specific policy variables or future election outcomes.
- Future economic conditions remain subject to frequent policy changes, but clarity is anticipated to increase if the administration provides greater certainty to the market.
- Forward-looking statements regarding these economic projections carry no guarantee of achievement, and the issuing entity disclaims liability for any resulting losses or damages.