Goldman Sachs lowers the predicted likelihood of a U.S. recession within the next year to 30%.
Goldman Sachs just dropped some major insights on the influence of the U.S.-China trade deal on our economic landscape. Here's what we're cookin' up:
All right, let's dive into Goldman's latest intel on that trade beef between America and China. First off, they've slashed the probability of a U.S. recession within the next year from 35% down to a more manageable 30%. Don't panic, dude! That's because relations have chilled significantly since they struck a deal, resulting in lower levels of trade policy uncertainty.
Now, you might be wondering about inflation. Well, Goldman reckons the impact of tariffs on consumer prices isn't as intense as they initially foresaw. Actually, the core PCE price index - that's a fancy way of saying inflation without accounting for food and energy costs - rose by a measly 0.12% in April with a year-over-year rate of 2.52%. Don't read too much into it, though; moderation in inflation pressure doesn't mean we're swimming in a sea of cheap goods.
But, hey, Goldman ain't all doom and gloom. They've boosted their 2025 U.S. GDP growth expectation from a puny 1% to a slightly beefier 1.25%. What's the beef? Basically, improved financial conditions and reduced trade policy uncertainty have returned to pre-tariff levels. Good news for all of us, right?
Of course, things can still go sideways, with uncertainties lurking in the shadows – notably, potential changes in trade dynamics and future policy moves. But, for now, it seems we're sailing on a slightly smoother sea. Keep your eyes peeled for further developments!
(Source: Siddarth S in Bengaluru; Editing by Arun Koyyur and Shailesh Kuber)
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Note 2: Core PCE price index - Consumer Price Index (CPI) excluding volatile food and energy categories, often used to measure inflation in the U.S. economy.
The insights from Goldman Sachs suggest that reduced trade policy uncertainty due to the U.S.-China trade deal may contribute positively to business finances by easing some uncertainties. Nevertheless, the impact of tariffs on consumer prices, as indicated by the Core PCE price index, remains minimal, hinting at minimal changes in the financial landscape of markets.
