Increased Recession Risk in the United States, Warns Goldman Sachs

At least seven prominent investment banks have raised their projections on the recession risk. JPMorgan estimates that there is a 60% chance of a recession both in the United States and globally, due to concerns that tariffs will not only increase inflation in the U.S., but also provoke retaliation from other nations, as China has already announced. Over the weekend, Goldman Sachs cut its economic growth forecast for the United States in 2025 from 1.5% to 1.3%. This figure remains more optimistic than Wells Fargo Investment Institute’s growth forecast of 1%, while J.P. Morgan anticipates a contraction of 0.3% quarterly. However, Goldman still expects the Federal Reserve to cut interest rates by 25 basis points in the three upcoming meetings. Nevertheless, it now anticipates that the first cut will be in June rather than July. Previously, it was expected that the Fed would lower rates twice this year from its current benchmark rate of 4.25% to 4.50%. On April 3, Goldman Sachs executives warned that U.S. tariffs would impact global growth and lead the Federal Reserve to cut interest rates more than previously anticipated. "We see this as somewhat of a growth impact (...) it’s going to be a hit for American consumers," stated Ashish Shah, Public Investments Director at Goldman Sachs Asset Management, during an event at the bank's headquarters in New York. As the market analyzes the repercussions of the tariffs, Goldman Sachs GS.N executives expressed that economic prospects are clouded by U.S. trade policies, which will likely lead to retaliation from other countries. Despite big investors seeking to diversify their portfolios globally, most are still clinging to their U.S. assets for now, noted Marc Nachmann, Global Head of Asset and Wealth Management at Goldman Sachs. "So far, large investors are cautious but restless," he emphasized. GSAM, which manages $2.8 trillion in public assets, is a key factor in Goldman’s strategy to enhance profits beyond its traditional areas of investment banking and trading, which generated about 65% of revenues in 2024. Although the stock market dropped following the announcement of tariffs, Treasury bonds began to rise on Thursday, as investors sought safe-haven assets, explained Lindsay Rosner, Head of Multi-Asset Fixed Income at GSAM. Information from Reuters.

The growing risk of recession in the United States may have significant implications for the Mexican economy, considering that the interdependence between both economies is high. It’s essential for both investors and consumers to stay informed and prepared, as changes in U.S. economic policy could reverberate across various areas, including trade and foreign direct investment in Mexico.