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The president of the United States, Donald Trump, announces that his administration has reached an agreement with the law firm Elite Skadden, ARPS, Slate, Meagher & Flom during an oath ceremony in the Oval Office of the White House on March 28, 2025 in Washington, DC.
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With the day of the decision that is coming this week for the last round of rates of President Donald Trump, Goldman Sachs hopes that the aggressive duties of the White House will increase inflation and unemployment and drag economic growth to almost a stagnation.
The investment bank now expects rates rates to increase 15 percentage points, its previous “risk” scenario that now seems more likely when Trump announces reciprocal tariffs on Wednesday. However, Goldman noticed that products and countries will eventually reduce to 9 percentage points.
When new commercial movements are enacted, the Goldman economic team led by the Chief of Global Investment Research, Jan Hatzius, sees a broad and negative impact on the economy.
In a note published on Sunday, the firm said that “we continue to believe that the risk of April 2 rates is greater than many market participants have previously assumed.”
Inflation above the target
In inflation, the firm sees its preferred core measure, excluding food and energy prices, reaching 3.5% in 2025, an increase of 0.5 percentage points with respect to the previous prognosis and well above the objective of 2% of the Federal Reserve.
That in turn will come with weak economic growth: only an annualized growth rate of 0.2% in the first quarter and 1% for the whole year when measured from the fourth quarter of 2024 to the fourth quarter of 2025, a lower percentage point of view of the previous prognosis. In addition, the Wall Street firm now sees unemployment that reaches 4.5%, an increase of 0.3 percentage points of the previous forecast.
Together, Goldman now expects a recession 35% probability in the next 12 months, compared to 20% in the previous perspectives.
The prognosis paints a growing opportunity for A seat economyWith low growth and high inflation. The last time that the United States saw the stagflation was at the end of the 1970s and early 80s. At that time, the Fed led by Paul Volcker drastically raised interest rates, sending the economy to the recession as the Central Bank chose the fight against inflation on economic support.
Three rates cuts
Goldman economists do not see that this is the case this time. In fact, the firm now expects the FED to reduce its reference rate three times this year, assuming increases in percentage trimester points, above a prior projection of two rate cuts.
“We have achieved the lonely Corte 2026 in our FED forecast at 2025 and now we expect three consecutive cuts this year in July, September and November, which would leave our terminal rate forecast unchanged at 3.5% -3.75%,” said Goldman economists, which refer to the Fed fund rate, from 4.25% to 4.50% today.
Although the scope of the latest rates is not yet known, the Wall Street Journal reported Sunday That Trump is pushing his team towards more aggressive taxes that could mean a general blow of 20% for US commercial partners.
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