Goldman Sachs Lowers 'US Recession Probability 45%→35%' Amid Tariff Truce

US GDP Growth Forecast for This Year Raised by 0.5%p to 1%

Lower Recession Probability Reduces Rate Cut Likelihood to "Once This Year"

Goldman Sachs has lowered its US recession forecast from 45% to 35%, reflecting expectations that the temporary tariff truce between the US and China will ease the global trade war.

According to Reuters on the 13th (local time), Goldman Sachs presented a revised US GDP growth forecast of 1%, up 0.5 percentage points, in a report released late the previous day.

Goldman Sachs also expects the Federal Reserve to cut rates a total of three times this year and next, reflecting improved growth prospects. It predicts a rate cut once in December this year instead of July, with the remaining cuts in March and June next year. Previously, Goldman Sachs anticipated three rate cuts this year.

Goldman stated, "With growth becoming robust again, the rise in unemployment rates has decreased, and the urgency for policy support has diminished, reducing the basis for rate cuts."

Goldman also raised the year-end target for the S&P500 from the previous 5,900 points to 6,100 points.

Meanwhile, Citigroup announced late the previous day that it had postponed its expected timing for a federal funds rate cut from June to July.

The previous day, the US and China agreed to lower import tariffs on each other by 115 percentage points for 90 days. Consequently, US tariffs on China returned to the pre-April level of 30%, while China's tariffs on the US were reduced to 10%.

Concerns over the tariff war have weakened corporate confidence and increased the risk of growth slowdown, leading global securities firms to raise the possibility of a US and global recession last month.

Guest Reporter Kim Jung-ah kja@hankyung.com