Goldman Sachs Exchanges The recession question
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Apr 11, 2025 
Join Jan Hatzius, Goldman Sachs' chief economist, and Dominic Wilson, a senior advisor in Global Markets Research, as they delve into the complexities of shifting tariff policies and their ramifications on the economy. They dissect the Federal Reserve's dilemma with inflation and growth, predict recession risks, and analyze volatile markets. The duo also addresses U.S.-China trade tensions and their unexpected impact on the dollar, offering valuable insights for navigating current economic uncertainty.
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Tariff Impact on Economy
- Tariffs hurt economic growth through price increases, tighter financial conditions, and investment uncertainty.
- A 1% tariff increase raises inflation and lowers growth by about 0.1%.
Fed's Dilemma
- The Federal Reserve faces a difficult decision due to rising inflation and growth concerns.
- Their actions will depend on inflation expectations and unemployment rate changes.
Treasury Yield Rise
- Treasury yields rose due to inflation concerns, fiscal worries, and potential foreign investor retreat.
- Leveraged position unwinds and market fragility also contributed to rising yields.