Brokerages Scale Back Recession Forecasts Amid U.S.-China Tariff Truce

Major brokerages have lowered U.S. recession forecasts following a U.S.-China tariff truce. Goldman Sachs, Barclays, and J.P. Morgan now predict fewer Federal Reserve rate cuts. This change in outlook has also prompted Goldman Sachs to raise its S&P 500 year-end target due to reduced recession and tariff concerns.

Major brokerages are revising their U.S. recession forecasts downward after the U.S. and China agreed to a temporary tariff truce, creating optimism for reduced global trade tensions. Notably, Goldman Sachs has lowered its recession forecast from 45% to 35%, signaling a positive step toward easing financial apprehensions.

In the wake of the tariff agreement, the U.S. intends to cut tariffs on Chinese imports from 145% to 30%, while China plans to reduce duties on U.S. goods from 125% to 10%. This development has led to renewed expectations of economic stability and business confidence, prompting Goldman to enhance its 2025 GDP growth forecast and re-evaluate Federal Reserve rate cuts.

While Goldman previously expected three rate cuts this year, it now anticipates these adjustments in December 2025 and beyond. This strategic shift reflects a move from insurance cuts to normalization amid firmer growth expectations. Barclays and J.P. Morgan have aligned with this outlook, predicting a solitary rate reduction in December 2025.