Goldman Sachs Plunges 5.3% on Recession Fears

On April 7, 2025, Goldman Sachs experienced a 5.3% drop in pre-market trading, reflecting investor concerns and market volatility.

Goldman Sachs has significantly revised its economic outlook for the United States, citing the impact of escalating trade tensions and potential policy changes. The firm has raised the probability of a U.S. economic recession within the next 12 months to 45%, up from a previous estimate of 35%. This adjustment comes as the firm anticipates a more severe impact on capital expenditures due to tightening financial conditions and increased policy uncertainty.

In response to these economic headwinds, Goldman Sachs has also adjusted its expectations for the Federal Reserve's monetary policy. The firm now predicts that the Fed will begin a series of rate cuts starting in June, earlier than previously anticipated. This move is seen as a preemptive measure to mitigate the economic fallout from trade tensions and potential policy changes.

Additionally, Goldman Sachs has highlighted the potential for a more severe economic downturn if the full extent of the proposed tariffs is implemented. The firm warns that such a scenario could lead to a significant increase in effective tariff rates, potentially pushing the U.S. economy into a recession. This underscores the firm's concern about the broader economic implications of the ongoing trade disputes.