The U.S. economy has a 40 percent chance of going into a recession in the second half of 2025, analysts at JP Morgan said on Wednesday, warning that higher tariffs are weighing on economic growth.
The investment bank said that tariffs could squeeze both consumer purchasing power and corporate profit margins.
In light of these risks, JP Morgan has downgraded its U.S. economic growth forecast for 2025 from 2 percent to 1.3 percent. Analysts also pointed to a concerning mix of slow economic output and persistent inflation, which they say bears resemblance to the 1970s era of stagflation.
JP Morgan said it expects the Federal Reserve to take a cautious approach to monetary easing, projecting only 100 basis points of rate cuts by spring 2026. This slower pace would likely lead to tighter financial conditions for an extended period, adding pressure on businesses and consumers alike.
JP Morgan warns of possible US recession in 2025
