The probability of a recession in the US is approaching 50%

The U.S. economy is facing heightened recession risks as rapidly escalating tariffs threaten to dampen growth, reignite inflation, and push up unemployment, Goldman Sachs warned on Sunday night.

In a note to clients, the Wall Street firm raised its estimate of a recession in the next 12 months to 35%, up from its previous projection of 20%.

Goldman also cut its 2025 GDP forecast to just 1% and increased its year-end unemployment estimate by 0.3 percentage points to 4.5%. The bank also revised its inflation outlook higher, citing mounting pressure from tariffs and weakening sentiment.

While Goldman Sachs still anticipates the U.S. may narrowly avoid a downturn, some other forecasters see the odds as closer to a coin toss. This marks Goldman’s highest recession risk projection since the regional banking turmoil two years ago. The primary driver now: a jolt from President Donald Trump’s escalating trade war, which is expected to ratchet up further this week.

Goldman pointed to “a sharp recent deterioration in household and business confidence,” and noted that comments from White House officials suggest the administration is increasingly willing to accept near-term economic pain in pursuit of its trade agenda.

Consumer sentiment has taken a serious hit. The University of Michigan’s survey, released Friday, showed a surge in the number of Americans expecting rising unemployment—now at the highest level since the Great Recession. Inflation expectations, meanwhile, have climbed to their highest level in 32 years.

“While sentiment has not always been a reliable indicator of real economic activity in recent years, we are less inclined to dismiss the recent decline,” Goldman said, “especially given that today’s economic fundamentals are not as strong as in past cycles.”

On the campaign trail, Trump pledged to make aggressive use of tariffs—but many investors, executives, and economists have been surprised by how fully he's followed through on that promise.

Speaking aboard Air Force One on Sunday, Trump downplayed earlier reports from Bloomberg and The Wall Street Journal suggesting that his administration would only initially match tariffs dollar-for-dollar on a small group of countries—possibly the “Dirty 15,” those with the largest trade imbalances with the U.S., as Treasury Secretary Scott Bessent floated last week.

Unusual Whales does not confirm the information's truthfulness or accuracy of the associated references, data, and cannot verify any of the information. Any content on this site or related pages are not intended to provide legal, tax, investment or insurance advice. Unusual Whales Inc. is not registered as a securities broker-dealer or an investment adviser with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority (“FINRA”) or any state securities regulatory authority. Nothing on Unusual Whales should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by Unusual Whales or any third party. Options, investing, trading is risky, and losses are more expected than profits. Please do own research before investing. Please only subscribe after reading our full terms and understanding options and the market, and the inherent risks of trading. It is highly recommended not to trade on this, or any, information from Unusual Whales. Markets are risky, and you will likely lose some or all of your capital. Please check our terms for full details.
Any content on this site or related pages are not intended to provide legal, tax, investment or insurance advice. Unusual Whales Inc. is not registered as a securities broker-dealer or an investment adviser with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority (“FINRA”) or any state securities regulatory authority. Nothing on Unusual Whales should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by Unusual Whales or any third party. Certain investment planning tools available on Unusual Whales may provide general investment education based on your input. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your legal or tax professional regarding your specific situation. See terms for more information.