Key takeaways:

• Goldman Sachs has raised its recession probability to 45%, citing growing concerns over President Trump’s proposed tariffs.
• J.P. Morgan estimates the risk of a recession at 60%, warning of significant inflation impacts.
• An expected rise in unemployment could see 2 million additional Americans without jobs if a recession materializes.

SINGAPORE, April 7 (Reuters) - Goldman Sachs has officially raised the probability of a U.S. recession to 45% over the next year, a significant increase from the previous estimate of 35%. This forecast change follows President Donald Trump's announcement of sweeping tariffs set to impact the global economy. Goldman noted that the tariffs contribute to tighter financial conditions and inject uncertainty into capital spending among businesses, leading to expectations of a downturn in economic activity.

After Trump's sweeping global tariffs were unveiled, reactions from leading economists and Wall Street analysts indicated a widespread pessimism regarding future economic growth. J.P. Morgan has placed the risk of a U.S. and global recession even higher at 60%, suggesting that Trump's tariff policies are among the largest tax increases in decades that could significantly burden American consumers. Thus, many financial institutions have adjusted their forecasts, incorporating these tariffs as a primary risk factor.

According to a report from Forbes, former Treasury Secretary Lawrence Summers provided a grim outlook, stating that a recession triggered by these tariffs could push an additional 2 million Americans into unemployment. This fear stems from the anticipated decrease in consumer confidence and spending as inflation rises.

Goldman has also adjusted its economic growth forecasts downward, anticipating a muted growth rate of only 1.3% for 2025, a revision from its earlier expectation of 1.5%. Other economists echoed similar sentiments, pointing to potential capital flight and dwindling investments as confidence in U.S. economic policy wanes.

Wall Street has been unsteady, with the S&P 500 slipping into a bear market, a shift attributed to growing fears of tariffs wreaking havoc on both domestic consumption and international trade. Treasury yields indicate a growing demand for safer assets, reflecting investor skepticism about economic health under current policy proposals.

As more nations engage with the U.S. over tariff negotiations, economists agree that the administration's current stance could escalate tensions further. Consumer confidence appears to be waning sharply, with many consumers bracing for economic difficulties ahead. The CBS News reported Treasury Secretary Scott Bessent downplaying recession worries while asserting that the economy is "in a good place," contrary to growing consensus among market analysts that uncertainty reigns.

The National Bureau of Economic Research (NBER) defines a recession as a significant decline in economic activity spreading across the economy lasting more than a few months. This definition signifies the critical role of real personal income, employment metrics, manufacturing output, and consumer consumption in the assessment process.

With Goldman Sachs, J.P. Morgan, and several other financial institutions foreseeing heightened risks of recession due to ongoing policy uncertainties, the economic landscape appears increasingly fragile as the effects of tariffs linger. For detailed analysis, you can view the original reports from India Times and NPR.