Goldman Sachs walked back a recession forecast Wednesday shortly after President Donald Trump announced a 90-day tariff “pause” on dozens of trading partners. The firm’s call came amid a broader market surge Wednesday afternoon, as investors cheered the news after an extremely volatile trading period for U.S. markets. Trump’s pause implies that the tariff level will be brought down to a universal 10% tariff on more than 75 U.S. trading partners while negotiations continue, according to the White House. Trump’s announcement excludes China, which now faces tariffs of 125% amid an escalating China-U.S. trade war. In light of Trump’s decision, Goldman suddenly lowered its expectations of how likely a recession will be this year. Goldman had put out a note 30 minutes prior to Trump’s announcement that raised the odds of a recession with a 12-month probability of 65% and forecast a GDP decline of 1% this year. “Together, these tariffs are likely to sum to something close to our previous expectation of a 15 [percentage point] increase in the effective tariff rate,” Goldman chief economist Jan Hatzius wrote in a Wednesday afternoon note to clients. “As a result, we are reverting to our previous non-recession baseline forecast with GDP growth of 0.5% and a 45% probability of recession.” Hatzius said he continues to expect additional sector-specific tariffs. “We think the White House is unlikely to quickly reverse most of the new tariffs, but our probability of recession would decline if it does,” the firm had previously said. .SPX 1Y line S & P 500 performance over the past year. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
