After Goldman Sachs downgrade, S&P Global forecasts US economic slowdown till 2027

The US economy is set to slow further, with S&P Global Market Intelligence forecasting GDP growth to decline from 2.8% in 2024 to 1.9% in both 2025 and 2026, followed by 1.6% in 2027, according to a report cited by Years. The firm expects the Federal Reserve to hold interest rates steady until December 2025.”S&P Global Market Intelligence forecasts 1.9% US GDP growth in 2025 followed by 1.9% growth in 2026,” the report stated, adding that the weaker economic outlook is primarily due to a slowdown in the first half of 2025.
The report noted that harsh winter weather had a significant impact, with the first-quarter growth forecast for personal consumption expenditures (PCE) cut by 1.1 percentage points. Additionally, ANI reported that expected federal layoffs are likely to lower second-quarter GDP growth by 0.3 percentage points.

Ben Herzon, Senior US Economist at S&P Global Market Intelligence, highlighted: “The markdown to growth this year is fully accounted for by weaker growth over the first half of this year. Unseasonably harsh winter weather contributed to a 1.1 percentage point markdown to our first-quarter forecast of PCE growth.”Tariff Hikes Weigh on Growth Outlook

The report pointed to trade policy changes as a major factor impacting US economic growth, particularly higher tariffs on China, Canada, and Mexico. The effective tariff rate on imports from China is expected to rise from 30% to 45% by June, with additional tariffs on Canada and Mexico set to follow.

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Inflation remains a key concern, with core PCE inflation expected to rise this year, delaying Fed rate cuts.

Goldman Sachs Lowers US GDP Forecast

Separately, Goldman Sachs slashed its 2025 GDP growth forecast to 1.7% from 2.4%, citing worsening trade policy expectations. Chief economist Jan Hatzius said the bank now expects the average US tariff rate to rise by 10 basis points this year, double its previous estimate.

“Instead, the reason for the downgrade is that our trade policy assumptions have become considerably more adverse, and the administration is managing expectations towards tariff-induced near-term economic weakness,” Hatzius said in a note to clients on Tuesday, as reported by Fortune.

J.P. Morgan’s Bruce Kasman raises US recession risk to 40%, warns of further rise

The probability of a US recession in 2025 has risen to 40%, up from 30% at the start of the year, according to Bruce Kasman, J.P. Morgan’s chief global economist. Speaking in Singapore on Wednesday, Kasman expressed growing concerns about the economy, as reported by Reuters, though he has yet to revise official forecasts.

He warned that recession risks could climb above 50% if Donald Trump’s proposed reciprocal tariffs take effect in April, further disrupting business confidence. “The continuation of disruptive, business-unfriendly policies would heighten the risk of a recession,” Kasman cautioned.

With agency inputs