• Goldman Sachs forecasts three 25-basis-point Fed rate cuts in September, October, and December 2025, citing weakening U.S. job growth.
  • Monthly job gains have slowed to ~30k, well below the ~80k needed for full employment, with analysts warning of potential negative revisions.
  • Risks extend beyond trade and immigration, with 'catch-up hiring' fading and industry growth nearing zero, though a sharper labor downturn could trigger a 50-bps cut.

Fed Easing Ahead as Labor Market Cools

Goldman Sachs has revised its outlook for Federal Reserve policy, now projecting three consecutive rate cuts in late 2025—each trimming 25 basis points—as U.S. job growth shows alarming signs of deceleration. The investment bank’s analysts highlight that monthly payroll additions have dwindled to approximately 30,000, far below the threshold required to sustain full employment. 'The labor market’s momentum is fading faster than anticipated,' noted one Goldman strategist familiar with the research. 'Even stable unemployment figures mask underlying fragility.'

Behind the forecast lies a broader erosion of economic drivers. The transient boost from post-pandemic 'catch-up hiring' has largely dissipated, while tariff-related inflation pressures appear contained—giving the Fed room to act. Though policymakers remain cautious, Goldman’s models suggest the central bank will prioritize preemptive easing over inflation vigilance. 'You’re seeing exhaustion across most sectors,' added the strategist. 'Growth isn’t just slowing; it’s stagnating.'

Political and Global Crosscurrents

The call for rate cuts arrives amid heightened tensions between Wall Street and the White House, with former President Donald Trump recently lashing out at Goldman over its tariff analyses. Meanwhile, global central banks are closely monitoring whether the Fed’s potential pivot could trigger synchronized policy shifts. Private discussions with European bankers reveal growing consensus that disinflation and trade uncertainty may soon compel similar moves abroad.

For markets, the implications are twofold: Borrowing costs could ease for businesses and homeowners, but savers may face diminished returns. 'This isn’t about crisis management—yet,' cautioned a fixed-income manager at a rival firm. 'But the Fed’s clearly shifting from 'higher for longer' to 'sooner and softer.''

Goldman Sachs declined to comment beyond its published research. The Federal Reserve has not publicly addressed the forecast.