- Goldman Sachs updates outlook due to tariffs, led by David Mericle.
- Forecast predicts inflation rise, GDP growth slowdown.
- Tariffs affect copper and key minerals, influencing market dynamics.
Goldman Sachs has revised its U.S. economic forecast, expecting increased inflation and diminished GDP growth due to new tariffs on copper and essential minerals, according to David Mericle and Jan Hatzius.
This alteration in economic forecasts signifies an important shift in market dynamics, impacting inflation rates and growth projections amidst tariff adjustments. Initial market reactions could see volatility in related sectors.
Goldman Sachs has adjusted its forecast due to U.S. tariff changes, anticipating a 1.7% increase in core prices within three years. GDP growth is expected to decrease by one percentage point this year. Senior economists at the firm, David Mericle and Jan Hatzius, emphasized these projections in recent statements. The increased costs from tariffs are projected to affect GDP and consumer spending patterns significantly.
Changes in tariffication force industries to reassess pricing and import strategies, impacting broader financial markets. These tariffs on minerals, notably copper, are a contributing factor to forecast adjustments. The financial ripple effects extend to market allocations, where institutional investors and asset managers are compelled to rethink equity, fixed income, and commodity strategies. While direct effects on cryptocurrencies like BTC and ETH remain unclear, historical trends suggest possible secondary impacts.
Tariffs are projected to cumulatively raise core prices by 1.7% over the next two to three years. Additionally, tariffs will reduce GDP growth by one percentage point this year, 0.4 percentage points in 2026, and 0.3 percentage points in 2027. — David Mericle, Chief U.S. Economist, Goldman Sachs Goldman Sachs Research Note
The aftershocks of these predictions may be echoed in commodities and crypto sectors alike. Historical precedents from similar situations have shown increased volatility in the USD and risk-off attitudes. These market conditions often lead to shifts in stablecoin flows and heightened interest in BTC as an inflation hedge. Whether these impacts will manifest in 2023 is a point of speculation. The uncertainty surrounding tariffs may prompt the Fed to consider policy adjustments to mitigate negative economic effects, with potential implications for future interest rates. Crypto market players remain observant, as the extent of these macroeconomic changes on digital assets is yet to be fully understood.
