Goldman Sachs Group Inc (NYSE:GS, ETR:GOS) has lowered its estimate of the likelihood of a US recession over the coming year to 35%, down from 45%, pointing to an easing of trade tensions between the United States and China.
The change followed an agreement announced on Monday by both countries to suspend tariff increases for 90 days.
Under the deal, US tariffs on Chinese imports will fall to 30% from 145%, while China will reduce duties on American goods to 10% from 125%.
The bank also adjusted its forecast for US economic growth in 2025, increasing its quarterly GDP projection by 0.5 percentage points to 1%.
It now expects the Federal Reserve to deliver a single interest rate cut in December, rather than the three it had previously anticipated. Two further reductions are forecast for March and June of 2026.
Goldman said the motivation for cutting rates had shifted from providing insurance to normalising policy, as economic growth appeared firmer than expected, unemployment was rising more slowly, and the need for policy support had lessened.
Investors and policymakers closely monitor the bank’s views due to its market influence and access to real-time economic data.
Other major banks have also revised their assessments of recession risk.
JPMorgan Chase has lowered its estimate to 40%, while Morgan Stanley has maintained a more optimistic view at 30%.
Bank of America continues to forecast a 50% probability, citing concerns about inflation and the uncertain effects of monetary tightening.