JPMorgan Raises U.S. Recession Risk to 35%
Economic Outlook Now More Pessimistic
Analysts Cite Ongoing Market Volatility and Global Headwinds
New York, NY – August 8, 2024 – JPMorgan Chase Co. has raised its forecast for the likelihood of a U.S. recession by 10 percentage points, from 25% to 35%, citing growing economic headwinds and market volatility. The bank's chief economist, Bruce Kasman, said in a note to clients that the bank is now "more cautious" about the economic outlook.
Kasman noted that the global economy is facing a number of challenges, including the ongoing war in Ukraine, rising inflation, and supply chain disruptions. He also cited the recent volatility in the financial markets, including the sharp selloff in stocks and bonds, as a sign of growing investor uncertainty.
"The combination of these factors is leading us to become more cautious about the economic outlook," Kasman wrote. "We now believe that the risk of a U.S. recession by the end of this year has increased to 35%."
JPMorgan's revised forecast is in line with other recent economic projections. Goldman Sachs recently raised its recession risk to 30%, while Bank of America now sees a 40% chance of a recession.
The increased risk of a recession is a concern for businesses and consumers alike. Businesses may be forced to lay off workers and cut back on investment if the economy slows down. Consumers may also reduce their spending if they become less confident about the future.
The Federal Reserve is expected to continue raising interest rates in an effort to combat inflation. However, there is a risk that the Fed could raise rates too quickly, which could lead to a recession.