A wave of economic anxiety has gripped Wall Street following Donald Trump's sweeping new tariffs, with leading banks warning of an impending recession. As reported by Bloomberg, JPMorgan’s Chief Economist Bruce Kasman now sees a 60% chance of a global recession in 2025, up from 40%. “The effect of this tax hike is likely to be magnified—through retaliation, a slide in US business sentiment, and supply chain disruptions,” Kasman wrote in a note titled There Will Be Blood.
Goldman Sachs echoed the concerns, raising its recession probability from 20% to 35% in the next 12 months. The firm also slashed its 2025 GDP forecast to just 1% and projected a rise in the unemployment rate to 4.5%. “The increase in our recession probability reflects the sharp deterioration in household and business confidence in the outlook over the last month,” Goldman’s report stated.
Financial markets reacted sharply to the tariff announcement, with the S&P 500 suffering its worst day since 2020. Consumer confidence has also plummeted, with the University of Michigan’s sentiment survey showing the highest percentage of Americans expecting unemployment to rise since the Great Recession. “While sentiment has been a poor predictor over activity in recent years, we are less dismissive of the recent decline because economic fundamentals are not as strong as in prior years,” Goldman Sachs noted.
