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

TradingKey – Less than eight weeks since Trump’s return to the White House, recession fears for the U.S. economy have surged. Yet the economic landscape Trump inherited appears relatively strong: inflation has cooled from highs, unemployment rates are 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 evolved 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 emphasis on tariffs has suppressed demand and fueled the fear of spending. In fact, both businesses and individuals are reducing their investments.

The New York Times noted that Trump's vow to create an economic boom has conflicted with the president's favorite economic tool - tariffs, at least for now. Trump defended the tariff policy by saying that the United States is going through a transition period, and they are bringing wealth back to the United States.

On the 10th, Goldman Sachs lowered the expected GDP growth rate of the United States in 2025 from 2.4% to 1.7%, and highlighted the assumptions about trade policies have become quite unfavorable.

Goldman Sachs emphasized three aspects of the drag that tariffs bring to 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%.