In a striking shift driven by easing U.S.-China trade tensions, several of the world’s top financial institutions are dialing back their U.S. recession forecasts, breathing new life into markets and recalibrating expectations for monetary policy in the coming year. After months of recession anxiety stoked by escalating tariffs and a volatile global outlook, a 90-day tariff truce has brought a measure of stability—and with it, a reassessment of economic risk.
FOX: “Oil, eggs and food are down. Seeing that reflected. All that hysteria over tariffs is not showing up in these numbers.”
The Golden Age
pic.twitter.com/JZcBptPsz7— Benny Johnson (@bennyjohnson) May 13, 2025
The breakthrough came as Washington and Beijing agreed to scale back tariffs for a limited period. The U.S. will lower duties on Chinese imports from an eye-watering 145% to 30%, while China will cut tariffs on U.S. goods from 125% to 10%. While temporary, the agreement has already had concrete macroeconomic effects.
The amount of people in the media upset by this is astounding … openly rooting against our country https://t.co/jx5MT0Z28Z
— Ryan James Girdusky (@RyanGirdusky) May 13, 2025
Leading the way, Goldman Sachs cut its U.S. recession probability from 45% to 35%, citing improved trade conditions and stronger-than-expected economic resilience. The bank also increased its U.S. GDP growth forecast for 2025 by 0.5 percentage points, now predicting a modest 1% annual growth.
Your tweet should read:
JP Morgan drops it’s recession projection after Trump caved and walked back his stupid tariffs.— Ron Smith (@Ronxyz00) May 13, 2025
Meanwhile, Barclays went even further, declaring it no longer sees a material risk of recession in the near term, while J.P. Morgan said the odds had fallen below 50%, though it stopped short of dismissing recession risks entirely.
JP Morgan has paid out over 40 billion in fines and penalties for illegal banking practices, since Dimon has been in charge. 40 billion in fines, no jailtime.
JP Morgan is actually insolvent when you include the trillions they hold in derivatives.
A very unreliable source of…— Robert Wilson (@sprinklv) May 13, 2025
As growth projections improve and inflation concerns soften, brokerages have adjusted their Federal Reserve rate cut timelines to reflect a less urgent need for economic stimulus:
-
Goldman Sachs now expects three total rate cuts between December 2025 and June 2026, shifting from its earlier forecast of cuts beginning this summer.
-
Barclays and J.P. Morgan have aligned with this revised timeline, each projecting a single cut in December 2025—a notable retreat from earlier expectations of mid-2025 cuts.
-
Citigroup, while maintaining a slightly more dovish stance, delayed its own forecast by one month, now expecting the Fed to move in July instead of June.
Goldman explained the rationale behind the shift:
“The rationale for rate cuts shifts from insurance to normalization as growth remains somewhat firmer, the unemployment rate rises by somewhat less, and the urgency for policy support is reduced.”
Markets have responded positively. Goldman Sachs raised its year-end S&P 500 target to 6,100 points, up from 5,900, citing a reduction in both tariff pressure and economic tail risk. The index closed at 5,844.19 on Monday, indicating investor confidence is already catching up to the revised outlooks.
