Goldman, other U.S. economic forecasts more dire as tariff impacts becoming a reality
Josh Schafer of Yahoo Finance recently reported that Goldman Sachs is among the financial firms worried about the U.S. economy amid President Trump’s continued tariff threats against the country’s trading partners. Powersports industry associations are also keeping a close eye on the tariff situation, which is very fluid and seems to change by the hour.
On March 10, Goldman’s team of economists, headed by Jan Hatzius, reduced its 2025 GDP forecast from 2.4% to 1.7%.
“The reason for the downgrade is that our trade policy assumptions have become considerably more adverse,” Hatzius writes.
In early March, Trump told reporters there was “no room left for Mexico or Canada” to negotiate an alternative to the tariffs, and that they would go into effect March 4.
Several industries may be affected by looming tariffs, including motorsports. Moto Canada, the country’s motorcycle and powersports industry association, called Trump’s tariffs on overseas goods selfish and short-sighted, and would significantly impact powersports jobs in the U.S. and Canada.
However, other companies, such as Massimo Motor Sports, are being proactive and moving its foreign manufacturing into Texas in order to sidestep the imposed tariffs.
Goldman joined the growing list of economists forecasting a negative outlook for the US economy.
Recently, chief U.S. economist for Morgan Stanley Michael Gapen adjusted his 2025 growth forecast from 1.9% down to 1.5%. Moreover, Goldman also predicted the U.S. tariff rate would increase by 10 percentage points this year, which would double their previous forecast.
Hatzius predicted that the current state of the economy would leave the door open for the Federal Reserve to slash interest rates this year, but the unpredictability of Trump’s economic strategy should keep rates stagnant for now.
“Our near-term view is that the Federal Open Market Committee will want to stay on the sidelines and make as little news as possible until the policy outlook has become clearer,” Hatzius says.
Various sources have also mentioned a possible recession, including former PIMCO CEO Mohamed El-Erian, who told Yahoo Finance that he sees a 25% to 30% chance the U.S. enters a recession this year—a 10% increase from before Trump took office.
Other prediction markets like Polymarket have placed the odds of the U.S. slipping into a 2025 recession at 40%.
