- Goldman Sachs said the trade war is “kicking the tires” of growth but appears unlikely to spark a recession.
- The banking giant said the scale of the growth impact, the Fed’s easing, and resilient business sentiment made an economic downturn seem unlikely.
- Goldman expects a 0.25% hit to US growth because of the trade war, a relatively small shock compared to the 2008/9 recession where growth fell 2%.
Goldman Sachs said the trade war is “kicking the tires” of growth but appears unlikely to spark a recession.
“Barring a large further escalation, we do not expect the trade war to cause a recession,” Daan Struyven and his team of economists wrote in a research note.
They predicted the trade war would lower US growth by about a quarter of a percentage point or 0.25%, a relatively mild drop compared to its 2% decline during the 2008/2009 financial crash. They also said the Federal Reserve’s recent interest-rate cut has offset the damage, and “financial conditions have eased substantially on net this year.”