Three top Wall Street brokerage firms have reduced the odds for a recession in their most recent economic forecasts after President Trump resolved trade tensions with China.

Barclays said on Tuesday that it no longer expects a recession in 2025 and projects fewer interest rate cuts than the firm had previously predicted. “We expect a less significant jump in inflation and no recession,” Barclays said in a statement.

Goldman Sachs also revised its recession forecast, cutting the likelihood of a downturn in the coming years to 35 percent; its previous projection was 45 percent. Meanwhile, JPMorgan Chase & Co. has also revised its economic outlook in light of the tariff agreement with China, and is now predicting stronger growth and lower recession risks. 

“The administration’s recent dialing down of some of the more draconian tariffs placed on China should reduce the risk that the U.S. economy slips into recession this year,” JPMorgan’s chief American economist, Michael Feroli, said Tuesday. While the bank acknowledges that recession risks remain, it now estimates the probability at less than 50 percent.

On Monday, the United States and China announced a deal to significantly scale back tariffs on each other’s goods over the next 90 days. Under the agreement, America will lower tariffs on Chinese imports to 30 percent, a sharp drop from the 145 percent President Trump imposed last month, while China will reduce duties on American goods to 10 percent, down from 125 percent. 

The news prompted Goldman Sachs to also boost its gross domestic product growth expectations for the United States this year, increasing its quarterly growth projection by half a percentage point to 1 percent. 

Regarding monetary policy, Goldman Sachs now anticipates only one Federal Reserve rate cut, in December, as opposed to its earlier expectation of three rate reductions this year. It also foresees two additional cuts, in March and June 2026. 

“The rationale for rate cuts shifts from insurance to normalization as growth remains somewhat firmer, the unemployment rate rises by somewhat less, and the urgency for policy support is reduced,” the brokerage firm said in a statement.

JPMorgan has also adjusted its forecast for annual economic growth in 2025, projecting a 0.6 percent increase compared to its earlier estimate of 0.2 percent. Inflation, measured by the personal consumption expenditures price index excluding food and energy, is now expected to rise to 3.5 percent, down from its prior forecast of 4 percent.

The Bureau of Labor Statistics on Tuesday said that the consumer price index — a widely monitored gauge of inflation — rose 0.2 percent in April compared with last month. The CPI,  which measures how much goods like gasoline, groceries, and rent cost, was up 2.3 percent on an annual basis. It was the lowest increase since February 2021.