JPMorgan Chase & Co. said he expects the US economy to fall into a recession this year after considering the impact of tariffs announced this week by the Trump administration.
“We are currently hoping that the actual GDP will be contracted with tariff weights. During the full year (4Q/4Q), we are looking for real GDP growth of -0.3% from the previous 1.3%,” Bank Chief US economist Michael Ferroli mentioned the domestic product in a memo to his client on Friday.
“The projected contraction in economic activity is expected to decline over time, as we raise the unemployment rate to 5.3%,” Ferroli said.
President Donald Trump’s major tariff announcements on US trading partners around the world on Wednesday sent the S&P 500 index of US stocks to its lowest level in 11 months.Wipe off 5.4 trillion dollarsYou will end the week as there is market value in just two trading sessions.
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JPMorgan’s forecast comes in parallel with similar changes from other banks that have been cutting forecasts for US growth this year since the tariff announcement. On Thursday, Barclays PLC saidI hope that GDP will sign a contract2025, “It coincides with the recession.”
On Friday, City Economists reduced this year’s growth forecast to just 0.1%, while UBS Economists fell to 0.4%.
“We expect imports from other parts of the world to surpass the forecast period by more than 20%, primarily in the next few quarters. “The strength of trade policy measures implies a massive macroeconomic adjustment to the $30 trillion economy.”
“Stagflation Prediction”
Ferroli said he hopes the Federal Reserve will begin cutting interest rates on its benchmarks in June, and advance interest rate cuts at each meeting through January, bringing the benchmark to a range of 2.75% to 3% from the current 4.25% to 4.5%.
These reductions will come, despite the current level of 2.8%, even though the key measure of underlying inflation has risen to 4.4% by the end of the year.
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“If it does happen, our male dogs will present a dilemma to Fed policymakers,” writes Ferroli. “We believe that the material weakness in the labour market will ultimately shake up. The committee is giving us more confidence that the price wage spiral has not been established, especially when wage growth is weak.”
“I feel like there’s no need to hurry,” Federal Reserve Chairman Jerome Powell said Friday. His comments follow the release of the latest monthly employment report from the Bureau of Labor Statistics.Showing robust employmentIn March, the unemployment rate rose slightly to 4.2%.
According to futures, investors are betting on full cut points by the end of the year.
This story was originally featured on Fortune.com.
