Goldman Sachs Reverses Recession Call After Tariff Pause

Economists at Goldman Sachs walked back their recession forecast Wednesday after President Donald Trump announced a 90-day pause on tariffs that had threatened to destabilize the economy.

Economists at the investment bank sent out a note Wednesday afternoon calling for a 45% chance of a recession within a year. They took back a call they had made just over an hour earlier, in which they had bumped the chances of a recession up to 65%.

The forecasting team pulled back on their recession predictions after Trump paused some of the “reciprocal” tariffs against trading partners that had gone into effect hours before.

The sudden about-face highlighted the difficulty of predicting the trajectory of the economy amid Trump’s frequent changes to trade policy. Economists have highlighted uncertainty about trade policy as a major risk to the economy since businesses may delay investment and hiring decisions until they have a better idea of what rules will apply long term.

Goldman’s 45% recession chance is still elevated from a few months ago. When Trump was elected, the bank predicted just a 15% chance of a recession as the economy appeared headed for a “soft landing” with a resilient labor market and declining inflation. Since then, Trump’s protectionist trade policies and the uncertainty surrounding them have raised the chances of reigniting inflation, slowing economic growth, and driving high job losses, according to forecasters.