Goldman Sachs economist David Mericle defended the firm’s forecast that tariffs will negatively impact consumers despite criticism from President Trump. Mericle asserted Goldman’s research, authored by economist Elsie Peng, indicates consumers will bear approximately two-thirds of the costs. This would push the personal consumption expenditures price index to 3.2% by year-end. The economist believes this effect is a one-time occurrence unlikely to significantly influence the Federal Reserve’s policy decisions, as the labor market remains a primary concern.
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Goldman Sachs estimates a complete decoupling of US and Chinese capital markets could trigger a US$2.5 trillion sell-off, with US investors offloading nearly US$800 billion in Chinese equities and China divesting US$1.7 trillion in US Treasuries and equities. This scenario assumes US regulatory restrictions on Chinese investments. The potential delisting of US-traded Chinese companies, fueled by escalating trade tensions, is the primary catalyst for this projected market disruption. Such a move would impact approximately 300 Chinese firms listed on US exchanges.
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Goldman Sachs analysts predict a worst-case scenario of Brent crude oil prices falling below $40 per barrel by late 2026, driven by a global GDP slowdown and a complete reversal of OPEC+ production cuts. Their base-case forecast, however, anticipates Brent crude at $55 per barrel by December 2026, assuming moderate OPEC supply increases and no US recession. A more moderate recession scenario projects Brent at $50 per barrel by December 2026. This price volatility significantly impacts US oil producers, many of whom have breakeven costs exceeding $62 per barrel, threatening production and profitability.
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Goldman Sachs’ recent upward revision of the US recession probability to 35%, from a previous estimate of 20%, is a significant development that deserves careful consideration. This increase reflects a growing concern among economists about the trajectory of the US economy. The jump alone suggests a rapidly evolving situation, prompting a reassessment of economic forecasts.
The increased probability underscores the accumulating economic headwinds. These include factors such as persistent inflation, rising interest rates, and a weakening consumer confidence. The current economic climate is reminiscent of past periods that preceded significant economic downturns, raising anxieties among investors and the public.
Many observers believe that the 35% figure itself may be an underestimation of the actual risk.… Continue reading
Goldman Sachs predicts a brighter economic future if Democrats sweep the White House and Congress. This news comes as no surprise, considering historical data that clearly demonstrates the economic success under Democratic leadership. The potential for stronger GDP growth and job creation is a promising prospect if Vice President Kamala Harris and the Democrats secure control of both chambers of Congress.
The economic implications of a Republican victory, especially under the leadership of Donald Trump, have been cautioned against by Goldman Sachs economists. The impact of tariff imposition and tighter immigration policies would outweigh any potential growth from maintaining tax cuts.… Continue reading
John Q. Hosedrinker 
Matt Underwood