Wall Street Banks Lower Economic Growth Forecasts One After Another
Goldman Sachs Cuts to 1.7%, Morgan Stanley to 1.5%
As fears of a recession spread on Wall Street following U.S. President Donald Trump's remarks about enduring an economic downturn, major banks are lowering their economic growth forecasts for this year one after another. There are also projections that if a U.S. recession occurs, the S&P 500 index on the New York Stock Exchange could fall by up to 20%.
On the 10th (local time), Goldman Sachs described trade policies as significantly negative and revised down its annual U.S. GDP growth forecast for this year from 2.4% at the beginning of the year to 1.7%. The probability of a U.S. recession this year was raised from 15% to 20%.
JP Morgan increased the probability of a U.S. recession from 30% to 40%.
Morgan Stanley had already lowered its U.S. GDP growth forecast for this year from 1.9% to 1.5%.
Wall Street’s stock market decline forecasts are also spreading.
Morgan Stanley predicted that if signs of a recession appear, the S&P 500 index could drop by up to 20%. JP Morgan expects the S&P 500 index to fall to 5200, while Citigroup sees it dropping to around 5500. Last December, the top 10 major banks forecasted that the S&P 500 index would rise 10% by the end of 2025, reaching 6550.
Michael Wilson, head of U.S. equity strategy at Morgan Stanley, said, "If growth declines further and a recession occurs, the S&P 500 index could fall nearly 20% from its current level. We are not there yet, but the situation can change quickly."
However, if a recession does not occur, he forecasted that the S&P 500 index would hit a low around 5500 in the first half of this year and recover to 6500 by the end of the year.
Former President Trump’s statement the day before, expressing his willingness to push forward with tariff policies even if it means enduring a temporary recession, has spread fears of an economic downturn in the market. In an interview with Fox News aired on the 9th, when asked about the possibility of a recession this year, he said, "I don’t want to predict that," but added, "We are doing very big things, and there is a transition period in such matters." He continued, "We are doing something big to bring wealth back to America," and said, "These things always take some time, but I believe it will be better for us."
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