The U.S. recession probability decreased to 30% according to Goldman Sachs because Washington and Beijing confirmed their framework deal which reduced trade policy uncertainty.
The brokerage had previously forecast a 35% chance of recession. The breakthrough agreement between the two countries includes two key provisions: China will lift its rare earth export restrictions and Chinese students will regain access to U.S. universities.
The market experienced volatility after President Trump introduced April 2 tariffs but investor confidence has since recovered. Goldman Sachs analysts observe that consumer price data shows minimal inflation effects from the duties at present but expect costs to increase during the remainder of the year.
The Goldman Sachs analysts stated in their note that financial conditions have returned to pre-tariff levels while trade policy risks show signs of decreasing.
The firm increased its 2025 U.S. GDP growth forecast to 1.25% from 1% because current economic patterns suggest a stronger growth path. The stabilization of inflation indicators has enhanced the prospects for a soft landing despite remaining uncertainty about inflation.
