JPMorgan Chase & Co. now sees a 35% chance that the US economy tips into a recession by the end of this year, up from 25% as of the start of last month.
US news “hints at a sharper-than-expected weakening in labor demand and early signs of labor shedding,” JPMorgan economists led by Bruce Kasman wrote in a note to clients Wednesday. The team kept the odds of a recession by the second half of 2025 at 45%.
“This modest increase in our assessment of recession risk contrasts with a more substantial reassessment we are making to the interest rate outlook,” Kasman and his colleagues wrote. JPMorgan now sees just a 30% chance of the Federal Reserve and its peers keeping interest rates “high-for-long,” compared with a 50-50 assessment as recently as two months back.
With US inflation pressures coming down, JPMorgan sees the Fed cutting rates by half a percentage point in September and November.
The bank’s new calculation for recession risks follows a similar step by Goldman Sachs Group Inc., which now sees a 25% probability of a recession in the next year.
Realization of a “US/global recession” would “almost certainly produce a sharp and immediate easing” by central banks, the JPMorgan economists also wrote.
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