Goldman Sachs citing trade war developments:
- In light of these developments and the meaningful easing in financial conditions over the last month, we are raising our 2025 growth forecast by 0.5pp to 1% Q4/Q4 and reducing our 12-month recession odds to 35%.
- Now forecast a December FOMC rate cut instead of July
- "We have lowered our core PCE inflation path to peak at 3.6% (vs. 3.8% previously)
The Wall Street Journal's Timiraos with the info.
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Earlier GS analysis of the trade war ceasefire:
- The large reduction in the US tariff rate on China should only have a limited impact on the overall US effective tariff rate.”
- Sees “only a small (less than 2pp) decrease to the US’ current effective tariff rate from the relaxation in China tariffs.”
- “After accounting for a reduction of that magnitude, the full set of US tariffs would still be considerably higher and broader than expected by markets at the start of the year.”
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While the trade war ceasefire is good news, Trump stepping back from the brink of economic catastrophe at home and abroad, tariffs are still high - the highest since WW2.
