Goldman Sachs: Major downward revision to forecasts!

On March 31st, Goldman Sachs' trading desk stated in their "2-minute speed read" that, "this weekend, we made significant downward adjustments to our forecasts, which is a fairly significant adjustment for quite some time." Here are the specifics: 1. Tariffs Goldman Sachs predicts that starting on April 2nd, the United States will implement average retaliatory tariffs of 15% on all trading partners (which will eventually decrease to 9%). Adding the current tariffs already imposed and additional industry-specific tariffs, this will increase the tariff level by 15 percentage points higher than Goldman Sachs' previous estimate of a 10% increase. Goldman Sachs believes this will bring negative unexpected impact to the markets: recent surveys by the International Monetary and Financial Committee (IMFC) show that ordinary investors expect the actual tariff rate to increase by around 9% this year; only a very small percentage of investors (4%) expect an increase of 15% or more. 2. U.S. Situation The core Personal Consumption Expenditure (PCE) forecast for the end of 2025 has been raised from 3.0% to 3.5%. The forecast for GDP growth in the fourth quarter of 2025 has been lowered by 0.5 percentage points to 1%. The unemployment rate forecast for the end of 2025 has been raised by 0.3 percentage points to 4.5%. The probability of an economic recession in the U.S. in the next 12 months has been raised from 20% to 35%. It is expected that the Federal Reserve will conduct three successive "pre-emptive rate cuts" in July, September, and November this year. 3. S&P 500 Index The forecasted returns for 3 months and 12 months have been downgraded to -5% and +6%, respectively, with corresponding index levels of around 5300 points and 5900 points. Based on historical stock market recession patterns, the S&P 500 Index may drop by about 25% from recent market peaks; if the 35% recession probability materializes, it could fall further by 17% to around 4600 points. 4. European Situation Higher tariffs will further reduce the Eurozone's actual GDP by an additional 0.25%, bringing the overall GDP decline to 0.7%. Goldman Sachs now predicts sluggish economic growth for the remaining time in 2025, with non-annualized growth rates of 0.1%, 0.0%, and 0.2% for the second, third, and fourth quarters respectively. The European Central Bank is expected to cut rates in April, June, and July (adding a rate cut in July), bringing the final interest rate down to 1.75% (previously 2%).