Did Donald Trump kill the nascent M&A recovery? Maybe!

So far, the defining feature of “Trump 2.0” is uncertainty. And markets hate that more than pretty much anything else in the world.

Ambiguity around US trade policy — and a lot else besides — has contributed to a loss of growth momentum in the US, where consumer sentiment’s back-footed and CEO confidence, at least on one measure, is the worst since 2020. Stocks, meanwhile, dove into correction territory last week.

As Goldman’s David Kostin gently noted in his latest, “one consequence of a softer economic growth outlook, higher uncertainty and elevated market volatility will likely be weaker completed M&A activity than we and many market participants had expected.”

There’s the chart. And it reflects a sharp cut to Goldman’s M&A forecast for 2025. As you can see, the bank now expects just 7% volume growth. Just a few months ago, that projection was 25%.

Although 7% would still be better than 2024’s 6%, it’d be subdued by non-recessionary standards. Again, the proximate cause of Goldman’s suddenly more cautious outlook is “expectations for slower economic growth and lower CEO confidence.” Kostin also said favorable regulatory shifts may prove less dramatic (read: less positively impactful) than thought.

If you’re wondering how bad things could get in a worst-case tariff scenario, the answer’s that M&A volumes could actually contract. “In a tariff risk scenario, we assume that US GDP growth would slow further to 1.5% and assume CEO confidence falls near levels reached during the 2018-19 trade conflict,” Kostin wrote, noting that in the (likely) event financial conditions were to tighten as tariff tensions build, that’d put “incremental” (i.e., additional) pressure on M&A volumes.

How about ECM? As a quick reminder: The C-suite on Wall Street spent 2023 and 2024 talking up an ECM recovery, if not a return to the halcyon, go-go days of 2021, when “stimmy” created an “everything bubble.” At least when it comes to IPOs, Kostin cautioned that the same factors which he sees dragging M&A may portend a weaker outlook for public listings.

The figure on the left, below, shows that the bank’s barometer (which attempts to discern how favorable the current environment is for IPOs) turned down abruptly in March. If the downturn’s confirmed (for now, it’s just an intra-month estimate), it’d take Goldman’s gauge to 100, which is neutral, from 125 in February.

The figure on the right shows that just a dozen companies have raised more than $25 million so far this year. That number at this time in 2024 was 11.

Should the stock correction worsen, and in the event business surveys deteriorate further, Kostin said there’s a risk the bank’s IPO barometer could drop to 75, “reflecting a more challenging environment for IPOs akin to early 2023” which, as is clear from Exhibit 8, wasn’t a great year. He also said the typical stock which went public during the first two and half months of 2025 is down more than 20% so far.

Goldman went on to note that stocks sensitive to capital markets activity — i.e., alternative asset managers, advisors and investment banks — are down 23% from the highs in late January. As Kostin put it, that suggests that “post-election optimism around a broad-based surge in activity has diminished.”

Oh, and he cut Goldman’s S&P forecast for 2025 to 6,200 from 6,500.