Trump’s Recession Odds: 50-50? U.S. 2025 GDP Growth Might Slip to 1% Range

TradingKey – Less than eight weeks into Trump’s return to the White House, fears of a U.S. economy have surged. Yet the economic landscape he inherited appears relatively strong: inflation has cooled from previous highs, unemployment rate remains low, and his policies seem poised to disrupt the American Dream.

Former U.S. Treasury Secretary Larry Summers recently warned that the risk of a U.S. recession has shifted from negligible to significant. "I would have said a couple of months ago a recession was really unlikely this year. Now, it’s probably not 50/50, but getting close to 50/50," he stated. 

Summers added, “There is one central reason. Economic policies that are completely counterproductive.”

Summers pointed out that the Trump administration's focus on tariffs has suppressed demand and fueled consumer spending fears. As a result, both businesses and individuals are reducing their investments.

The New York Times noted that Trump's promise to create an economic boom appears at odds with his favored economic tool - tariffs, at least for now. Trump defended the tariff policy, stating that the United States is going through a transition periodand that the measures are aimed at bringing wealth back to the United States.

On March 10, Goldman Sachs lowered its 2025 U.S. GDP growth forecast from 2.4% to 1.7%, citing increasingly unfavorable assumptions about trade policies

Goldman Sachs emphasized three key ways tariffs weigh on the economy: raising consumer prices and reducing real income; tariffs are usually accompanied by a tighter financial environment; the uncertainty of tariff implementation leads to businesses delaying their investments.

Coincidentally, Morgan Stanley previously lowered the economic growth rate of the United States from 1.9% to 1.5%.