30% Probability Of US Recession Is Goldman’s Latest Assumption After Trade Tensions Ease Post China Deal

Stocktwits - Goldman Sachs (NYSE:GS) on Thursday reportedly slashed its U.S. recession probability to 30% from 35% for the next 12 months as uncertainty around the ongoing tariff wars eased following the U.S.-China deal announcement.

President Donald Trump on Wednesday morning cheered the United States’ deal with China and said that the relationship between the two countries is excellent.

Trump stated that he will work closely with Chinese President Xi Jinping to revamp the U.S.-China trade, which he believes will be great for both nations.

According to Goldman, domestic inflation readings so far have shown a marginally smaller impact on U.S. consumer prices from tariffs.

"Broad financial conditions have now eased back to roughly pre-tariff levels... (and) measures of trade policy uncertainty have moderated a bit following steps toward de-escalation," the firm said, according to a Reuters report.

U.S. consumer prices rose slower than expected in May amid increasing economic uncertainty due to President Donald Trump’s tariff war.

According to data from the Bureau of Labor Statistics (BLS), the consumer price index (CPI) rose 0.1% in May on a seasonally adjusted basis, following a similar rise in April. On an annual basis, CPI rose 2.4% before the seasonal adjustment.

Recession fears and economic uncertainty have driven many firms to withdraw or modify their full-year growth outlook. At the same time, many companies have also announced drastic workforce reductions and cost-cutting measures to tackle the potential uncertain environment.

Meanwhile, Goldman Sachs also raised its 2025 U.S. GDP growth prediction to 1.25% from its earlier forecast of 1% on a quarterly basis.

Benchmark U.S. indices traded in the green on Thursday. The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, traded 0.12% higher, while the Invesco QQQ Trust, Series 1 (QQQ), which tracks the Nasdaq Composite, was up 0.11%.

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