JPMorgan Raises Recession Odds to 40%, Nasdaq Drops 4%

On March 10, investors began to retreat from risk assets as JPMorgan increased the odds of a recession to 40%. This shift came despite efforts from the White House to mitigate concerns about the economic outlook. Economists at JPMorgan cited extreme US policies as a significant risk factor for a potential recession this year, raising their forecast from 30% at the beginning of 2025.

This move by JPMorgan was not an isolated event. Goldman Sachs also increased its 12-month recession probability to 20%, up from 15%, warning that the forecast could rise further if the administration remains committed to its policies despite worsening economic data. Morgan Stanley, on the other hand, lowered its economic growth forecasts and raised inflation expectations, predicting a GDP growth of just 1.5% in 2025, falling to 1.2% in 2026.

Despite these grim forecasts, a key economic adviser to the US President pushed back against recession talks. Kevin Hassett, who heads the National Economic Council, expressed optimism about the US economy's future, acknowledging temporary data blips but emphasizing long-term bullish prospects. Similarly, the President himself described the current economic situation as a period of transition, downplaying the immediate risks of a recession.

The market reaction to these developments was swift and significant. Tech stocks and cryptocurrencies experienced large selloffs, with the S&P 500 and Nasdaq both ending the day in the red. The Nasdaq, in particular, had its worst day since 2022, falling by 4%. The tech-heavy index has lost almost 10% this year, and the S&P 500 is now lower than it was before the November election victory. The Magnificent 7—America’s top tech firms—saw a collective market cap loss of over $750 billion in a single day, with Tesla leading the decline with a 15% drop.

Crypto markets also felt the impact, plunging to their lowest point since early November. The total market capitalization fell by 7.5% to $2.6 trillion, with around $240 billion exiting the space. Bitcoin, the leading cryptocurrency, dropped 4% on the day, hitting $76,784 before recovering slightly to $79,