Goldman Sachs analysts suggest the S&P 500's outlook is clouded by persistent recession risks, despite some market recovery. Concerns stem from the potential economic impact of tariffs and recent GDP data.
Vickie Chang, a Goldman Sachs macro strategist, points out that markets often rebound with reduced headline risk, but vulnerability remains if a recession occurs. The full effect of higher tariffs is still unfolding, with potential consequences for economic growth.
First-quarter GDP data revealed a contraction of 0.3%, and April hiring figures indicate a slowdown, suggesting underlying economic weakness even before the full impact of tariffs is felt. Goldman Sachs has revised its S&P 500 earnings per share growth target for 2025, cutting it by more than half, from 7% to 3%. The bank also places the chances of a U.S. recession over the next 12 months at 35%. Continued market recovery depends on avoiding recessionary dynamics, requiring sustained confidence despite the current economic data.