JPMorgan Warns 40% Chance of US Recession in 2025 Due to Tariffs

JPMorgan Chase analysts have issued a warning about the U.S. economy, predicting a "stagflationary" slowdown in 2025 due to escalating tariffs. This economic scenario is characterized by high inflation and slow economic growth, posing significant challenges for policymakers and businesses. The analysts estimate that there is a 40% probability of the U.S. economy entering a recession in the latter half of 2025. This forecast is based on the anticipated impact of increased tariffs, which are expected to dampen economic activity and exacerbate inflationary pressures.

The firm's outlook is particularly bearish on the U.S. dollar, suggesting that the currency could face depreciation as a result of these economic headwinds. The analysts' forecast for U.S. economic growth in 2025 is notably subdued, with GDP growth projected to slow to 1.3%. This slowdown is attributed to the "stagflationary impulse" unleashed by the tariffs, which are likely to disrupt supply chains, increase production costs, and reduce consumer spending.

The analysts' concerns are not limited to the U.S. economy; they also highlight the potential for a slowdown in global economic growth. The current U.S. trade policies, particularly the high tariffs, are seen as a significant risk factor for the global economy. The analysts warn that these policies could reinforce economic instability, leading to a broader slowdown and increased inflation risks worldwide.

The forecast of a 40% chance of recession in the latter half of 2025 underscores the severity of the economic challenges ahead. This probability is based on the analysts' assessment of the potential impact of tariffs on various sectors of the economy. The analysts note that the slowdown could be exacerbated by other factors, such as geopolitical tensions and domestic policy uncertainties.

In summary, JPMorgan's analysis paints a grim picture of the U.S. economy in 2025, with a high likelihood of stagflation and a significant risk of recession. The firm's bearish outlook on the dollar and the global economy reflects the far-reaching implications of the current trade policies. As the economic landscape becomes increasingly uncertain, businesses and policymakers will need to navigate these challenges with careful planning and strategic decision-making.