Goldman Sachs has sharply raised its estimate for the likelihood of a U.S. economic downturn within the next year to 45%, citing tightening financial conditions and growing uncertainty over economic policy.
The revised forecast — up from 35% — underscores the potential impact of President Donald Trump’s tariff measures, which have disrupted trade flows and rattled investor confidence. Analysts warn that these actions could weigh heavily on corporate investment and consumer demand, increasing the risk of a broader economic slowdown.
Tech and consumer goods sectors are particularly vulnerable, it said as Apple shares plunged 9.3% on Thursday — the company’s steepest single-day drop since March 2020. Concerns mounted over how tariffs on imported components might impact pricing. With more than 220 million iPhones sold annually, Apple now faces a tough decision: absorb rising costs or pass them along to consumers, potentially raising prices by 30–40%.
Apart from Goldman Sachs, J.P. Morgan has already raised its own projection, estimating a 60% chance of a U.S. and global recession. The revisions reflect a growing consensus among top financial institutions that the economic headwinds from trade disruptions are more severe than previously anticipated.
In Europe, investors are also feeling the heat. The continent’s major indexes closed the week in negative territory, with the Stoxx 600 falling 5% on Friday and down over 8% for the week — its worst performance this year. Luxury retailers were among the hardest hit, with the Stoxx Luxury 10 index posting a 5.2% loss, its steepest decline in nearly four years.
Trump Unmoved
Despite the mounting turmoil, President Trump remains undeterred, posting on Truth Social: “CHINA PLAYED IT WRONG, THEY PANICKED — THE ONE THING THEY CANNOT AFFORD TO DO!”
While today’s combination of tightening financial conditions and rising geopolitical risk is raising alarm bells across the financial world, the Trump Administration is unmoved highlighting on 50 nations rushing to White House to hold talks on tariffs.
As policymakers, businesses, and investors navigate this turbulent landscape, hopes rest on a diplomatic resolution to the trade disputes. Without it, the risk of a prolonged downturn — both in the U.S. and globally — may grow harder to avoid.