Goldman Sachs (GS) now expects a 30% chance of a recession over the next 12 months compared to its prior reading of 35% following positive trade developments and smaller-than-expected inflation impacts from tariffs. It also raised its U.S. gross domestic product (GDP) growth estimate to 1.25% from 1.00%.
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“Broad financial conditions have now eased back to roughly pre-tariff levels… (and) measures of trade policy uncertainty have moderated a bit following steps toward de-escalation,” said the investment bank.
U.S. Makes Trade Deal Progress amid Soft Inflation
President Trump described the U.S. and China’s relationship as “EXCELLENT” after top trade representatives from both countries agreed to a framework deal. The deal is still pending approval from Trump and Chinese President Xi Jinping. In addition, the U.S. and Canada have exchanged a working document back and forth as they negotiate a deal.
As for inflation, May’s consumer price index (CPI) increased by 0.1% month-over-month and 2.4% year-over-year. Economists were expecting 0.2% and 2.4%, respectively, as inflation approaches the Fed’s target of 2%.
Check out TipRanks’ Economic Indicators Dashboard for the latest economic metrics.
