US President Donald Trump announces that his administration has entered into an agreement with law firm Elite Skadden, Arps, Slate, Meagher & Flom during a test ceremony in the White House Oval Office on March 28, 2025 in Washington, DC.
Andrew Harnik | Getty images
With the day of the decision that is looming this week for the last price cycle of President Donald Trump, Goldman Sachs expects aggressive white house tasks to increase inflation and unemployment and lead to economic growth to a little standard.
The investment bank now expects the rate rates to increase 15 percentage points, its previous “risk case” scenario which now seems more likely when Trump announces reciprocal rates on Wednesday. However, Goldman noted that exclusions from products and countries will eventually reduce this increase to 9 percentage points.
When the new commercial movements are promulgated, the Goldman’s economic team led by the Chief Research on World Investments Jan Hatzius sees a broad and negative impact on the economy.
In a note published on Sunday, the firm said: “We continue to believe that the risk of the prices of April 2 is greater than what many market players have presumed it”.
Inflation above the lens
On inflation, the company sees its favorite basic measure, excluding food and energy prices, reaching 3.5% in 2025, an increase of 0.5 percentage points compared to previous forecasts and well above the target of the federal reserve.
This will in turn be with low economic growth: just an annualized growth rate of 0.2% in the first quarter and 1% for the full year when it is measured in the fourth quarter of 2024 in the fourth quarter of 2025, down 0.5 percentage points compared to previous forecasts. In addition, Wall Street’s company now sees unemployment reaching 4.5%, an increase of 0.3 percentage of points compared to previous forecasts.
Overall, Goldman is now expecting 35% of recession in the next 12 months, compared to 20% in previous prospects.
Forecasts depict an increasing chance of a stagflation economy, with low growth and high inflation. The last time the United States saw stagflation, it was in the late 1970s and early 1980s. At the time, the Fed led by Paul Volcker considerably raised interest rates, sending the economy in recession while the Central Bank has chosen to combat inflation rather than supporting economic growth.
Three rate drops
Goldman economists do not see this time this time. In fact, the company now expects the Fed to reduces its reference rate three times this year, assuming that increases in percentage points of the quarters, up in relation to a previous projection of two rate drops.
“We achieved the only decrease of 2026 in our Fed forecasts in 2025 and we are now expecting three consecutive discounts this year in July, September and November, which would leave our terminal rate unchanged at 3.5% to 3.75%,” said Goldman economists, referring to the rate of Fed funds, from 4.25% to 4.50% today.
Although the magnitude of the last rates is still not known, the Wall Street Journal reported on Sunday The fact that Trump pushes his team to more aggressive samples that could mean a 20% cross for American trade partners.
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