JPMorgan Chase & Co., the largest bank in the United States, has revised its economic outlook for 2025, now forecasting that the U.S. will fall into a recession by the end of the year. This grim projection comes in response to the sweeping trade tariffs implemented by President Donald Trump, particularly the new 25% tariffs on automobiles and auto parts.
Michael Feroli, JPMorgan’s chief U.S. economist, stated that the real GDP is expected to contract, revising the bank’s previous forecast of 1.3% growth down to a negative 0.3%. JPMorgan now anticipates the U.S. economy will shrink for two consecutive quarters in the second half of 2025, signaling a technical recession.
These tariffs are not only expected to disrupt trade but also push inflation higher and increase unemployment. According to Feroli, the unemployment rate could rise to 5.3% as businesses feel the strain of higher import costs and decreased consumer demand.
Federal Reserve Chair Jerome Powell echoed concerns over the tariffs' inflationary impact, warning that they could slow down economic growth and complicate the Fed’s monetary policy decisions.
Financial markets are already reacting to these economic shocks. Major U.S. indices have seen sharp declines, with the Nasdaq officially entering bear market territory. Over $6.4 trillion in value has been wiped out from U.S. equities, and global markets are showing signs of distress.
Adding to the uncertainty, China has retaliated with a 34% tariff on a wide range of U.S. imports and has banned certain American products, escalating trade tensions between the world’s two largest economies.
Other institutions, including Goldman Sachs, have also raised their recession probabilities, citing a decline in both household and business confidence. Goldman now estimates a 35% chance of a U.S. recession in the next 12 months.
As economic anxiety mounts, all eyes are on the Federal Reserve and how it will respond. With inflation rising and growth stalling, policymakers face a challenging road ahead in stabilizing the economy.
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The information provided in this article is for informational purposes only and does not constitute financial, investment, or economic advice. Readers are encouraged to conduct their own research or consult with a financial advisor before making any investment or business decisions. The views expressed are based on publicly available information at the time of writing and are subject to change.