Goldman Sachs has raised its estimate for the likelihood of a U.S. recession in the next 12 months to 35%, up from 20%. The company – not surprisingly – cites risks from escalating trade tensions and weakening consumer and business confidence. They also add that “statements from White House officials indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies”, is a contributing factor

The firm lowered its 2025 GDP growth forecast to 1% and now expects three interest rate cuts this year—in July, September, and November.

It revised its year-end inflation forecast higher to 3.5%, based on the Fed’s preferred PCE index, and sees the unemployment rate rising to 4.5% by year-end.

Other major institutions share similar concerns, with JPMorgan assigning a 40% recession probability and Moody’s Analytics’ Mark Zandi warning of a two-in-five chance, pointing to soft consumer spending and persistently high inflation.