Goldman Sachs: Trump tax cuts, deregulation will boost growth; tariffs could be a drag

Published On Nov 18, 2024, 6:00 AM

Goldman Sachs has forecasted that the U.S. economy will grow about 2.5% in 2025, driven primarily by expected tax cuts and regulatory easing under President-elect Trump's administration. However, the projection includes concerns that aggressive tariffs, particularly on Chinese imports and autos, may negatively impact growth. Goldman Sachs anticipates inflation will rise slightly due to these tariffs, leading to the Federal Reserve implementing rate cuts in the near term. The predicted growth rate is greater than the current consensus, but economists warn that aggressive tariffs could suppress real disposable income and overall GDP growth. Goldman Sachs posits that the incoming administration's actions will only slightly offset the potential negative impacts of tariffs, especially if certain campaign promises are implemented in a more aggressive manner.