The risk of recession in the USA is greater than previously assumed and amounts to 45 percent – assessed the Goldman Sachs investment bank. He explained that the reason is an increase in uncertainty about economic policy and foreign consumer boycoty.
The bank has lowered the American growth forecast GDP in quarterly terms for the fourth quarter of this year. up to 0.5 percent with 1 percent and the average annual GDP growth forecast USA from 1.5 to 1.3 percent
This decision – as the bank said – was made “as a result of a violent exacerbation of financial conditions, foreign consumer boycotts and the persistent increase in uncertainty of economic policy.” According to GS, this uncertainty will probably limit capital investments, more than previously assumed.
US economy growth forecast
“This base forecast is still based on our current assumption that the effective customs rate in the US will increase by a total of 15 percentage points, which would now require a significant limitation of duties planned for April 9” – emphasized GS.
He explained that if most of the duties planned for this day come into force, the effective customs rate will increase by about 20 pp, then the bank's forecast for recession may change.
In the current base scenario, which assumes no recession, Goldman Sachs expects three packages interest rate reductioneach 25 base points, starting from June.
“In the case of recession, we would expect reductions by about 200 PB in the next year,” he added.
Factors that can reduce growth
Experts of the Investment Bank drew attention to three factors that deteriorated their prospects for economic growth in the USA.
“First of all, the financial conditions have exacerbated much more than we expected, in response to the announcement of the 'mutual' duties by the White House and to the announcement by the Chinese government of retaliation duties to export from the US. This is partly due to the fact that both ads were more aggressive than expected,” they explained.
As a second element, they indicated a decrease in the number of foreign tourists visiting the USA and consumer boycoty. Both indicate “lowering GDP growth in 2025 by 0.1-0.2 pp”. They added that their previous analysis assumed a retaliation response of foreign governments, but did not take into account the “bottom -up effects of consumer activities”.
The last factor – as they said – are indicators of uncertainty of economic policy, which “increased rapidly to levels much higher than during the previous trade war” from 2018.
“The effects of uncertainty will probably be much greater than beforebecause much more American companies can be affected by uncertainty associated with a much wider range of American and foreign duties, and some companies may also feel the effects of uncertainty in other areas of politics, such as fiscal or immigration policy, “the bank's experts pointed out.
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