Morgan Stanley are forecasting lower GDP growth for the US due to the negative impact of tarifss and a tight labor market resulting in higher inflation:

  • 2025 GDP growth projections lowered to 1.5%, slashed from 1.9% previously forecast
  • 2026 to 1.2%, from 1.3%
  • Morgan Stanley expect only one more 25bp rate cut from the Federal Open Market Committee (FOMC) in 2025, in June
  • Morgan Stanley add that they expect two more rate cuts from 2026, later than the market expects

Goldman Sachs:

  • 2025 GDP growth projection cut to 1.7%, from 2.2% expected previously
  • raised its US recession probability to 20%, from 15%
GDP USA
Source: Forex Live