Part 3/9:
The bearish sentiment was echoed by several key financial institutions. Beginning with Goldman Sachs, Chief Economist Jan Hatzius issued a revised outlook indicating a downgrade in economic forecast for 2025. This came just months after a notably positive projection. The firm's baseline growth forecast dropped from 2.4% to 1.7%, citing the potential impact of increased tariffs as the most significant risk.
Goldman Sachs quantified the potential fallout, suggesting that a 10% increase in tariffs could lead to inflation re-accelerating above 3%, which would impact both consumer prices and growth forecasts adversely. They anticipate average U.S. tariff rates to see a substantial increase, significantly altering the previous optimistic outlook.