Goldman Sachs Cuts US Q4 2025 Growth Forecast to 0.5% Amid 45% Recession Risk

Goldman Sachs has revised its economic outlook for the United States, lowering its growth forecast for the fourth quarter of 2025 and increasing the likelihood of a recession in the next 12 months. The investment bank now predicts that the U.S. economy will grow by 0.5% in the fourth quarter of 2025, down from its previous estimate. This adjustment comes amid a more challenging economic landscape, with the probability of a recession rising to 45% from 35%.

The revised forecast reflects a more pessimistic view of the U.S. economy, which has been grappling with various headwinds, including a sharp tightening in the financial environment, foreign consumer resistance, and escalating policy uncertainty. These factors are expected to suppress capital spending, potentially exceeding previous assumptions. The bank also anticipates that these challenges may lead to a more significant downturn than initially projected.

The increased risk of a recession is a significant development, as it suggests that the U.S. economy may be more vulnerable to downturns than previously thought. This assessment aligns with broader concerns about the global economic outlook, which has been clouded by trade tensions and other macroeconomic challenges. The bank's economists have noted that further downgrades to their growth forecast could occur depending on how ongoing tariff negotiations and other geopolitical developments unfold.

The revised outlook from Goldman Sachs underscores the need for investors and policymakers to remain vigilant in the face of evolving economic conditions. The increased risk of a recession and the downward revision in growth expectations highlight the challenges that lie ahead for the U.S. economy. As the situation continues to develop, it will be crucial for stakeholders to monitor economic indicators and adjust their strategies accordingly. The bank's economists have cited these factors as contributing to the downward revision in growth expectations, indicating a potential shift in monetary policy to support economic growth.