JPMorgan expects the U.S. economy to experience stagflation due to tariffs, with a recession probability of 40%

ChainCatcher news, according to Jinshi Data, JPMorgan analysts stated in a mid-year outlook research report on Wednesday that U.S. tariff policies could weigh on global economic growth and reignite inflation in the U.S. The bank believes there is a 40% chance that the U.S. will fall into recession in the second half of this year. It forecasts a U.S. economic growth rate of 1.3% in 2025, down from an earlier prediction of 2%. "The stagflation effect brought about by tariff increases is the reason we have downgraded our GDP growth expectations for this year," the report said.

JPMorgan is bearish on the dollar, citing a slowdown in U.S. economic growth, while policies supporting growth outside the U.S. will boost other currencies, including emerging market currencies. The bank expects the Federal Reserve to cut interest rates by 100 basis points between December and spring 2026. Analysts stated that if a recession occurs or the economic slowdown exceeds expectations, it would trigger a more aggressive rate-cutting cycle. However, the bank remains optimistic about the U.S. stock market, arguing that despite policy uncertainties, consumers and the economy still show resilience.