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Trade war could lead U.S. into recession

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Christian Fernsby ▼ | August 13, 2019
The trade war with China has a greater than expected effect on the U.S. economy, increasing the risk of a recession, Goldman Sachs warned on Monday.
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In a note sent to its clients, the investment bank considered it impossible to reach an agreement between Washington and Beijing before the U.S. presidential elections scheduled for November next year.

Topics: U.S. trade

Faced with this situation, the bank reduced its U.S. growth forecast for the fourth quarter by 20 basis points to 1.8 percent.

The uncertainty caused by the trade war could force companies to reduce spending, notes the text, signed by three Goldamn Sachs economists: Jan Hatzius, Alec Phillips and David Mericle.

'The fears that the trade war will trigger a recession are growing,' agree the experts.

Recently, President Donald Trump announced a new round of 10% tariffs on $300 billion worth of Chinese products beginning August 1.

Other market heavyweights such as Morgan Stanley and Moody's warned of a possible recession in the U.S. economy due to the trade conflict.

'I think it would be pretty hard to avoid a downturn, regardless of what the Fed (Federal Reserve) does,' said Mark Zandi, chief economist at Moody's Analytic.

Trump's moves 'could be incredibly damaging to the global economy,' agreed Kristina Hooper, a strategist at investment management firm, Invesco.

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