The JPMorgan Chase & Co., the largest bank in the United States and the West, in tune with other entities of the American power, warned in a hard report on an ominous prognosis for the growth of the country and the work stability of the result of LA protectionist and tariff offensive of the Donald Trump government.
Its forecasts point to a contraction of the activity at a 1% annualized quarterly rate in the third oy of 0.5% in the room, a recession of two quarters.
Concerns for the enormous crisis that has exploded would also seem to get to the White House, although without signs of change of course. After a week with historical collapses of the bags and an extraordinary destruction of wealth, the president came out this Saturday to recognize that the road “will not be easy” and called to resist, But he insisted that his measures, resisted by markets and corporations, will be successful.
On Thursday and Friday, in just two wheels, almost 6 billion dollars (millions of millions) of wealth of the main companies that are quoted on Wall Street were fulminated.
Pessimistic forecasts
Faced with this situation, JP Morgan made its analysis of an entry of the country in recession this year due to the impact of tariffs that will cause a sensitive fall in growth.
“We hope that real GDP is contracted by the impact of these measures and for the whole year we see a real GDP growth of -0.3%, less than 1.3% planned,” said Michael Feroli, chief economist of the bank for the United States, in a note aimed at customers.
“The planned contraction of economic activity is expected to reduce hiring and, over time, raise the 5.3%unemployment rate,” he added. Trump received a growing economy, with inflation below 3% per year and an unemployment at low historical levels.
“The result will be historical,” promises Trump
The president insisted this Saturday that his measures, which according to analysts are a classic protectionist package, configure “an economic revolution and we will win. They resist, it will not be easy, but the result will be historical. We will make the US again again.”
The Republican leader said that his plan will allow the power to “recover jobs and businesses as never before.” That vision is questioned by economists that fear a price increase and, due to replicas, a commercial war that slows world growth.
Trump said China, who responded with 34% tariffs for the US, “has been hit much stronger.” On Friday he had affirmed that Beijing “has panicked. The president made these comments from Florida, where he stayed to play golf for the third day since he declared on Wednesday a commercial war to the rest of the world, causing a stock market collapse from Asia to North America not seen from the outbreak of the pandemic in 2020.
This week the S&P500 index, the preferred panel of US actions. reached its lowest level in 11 months. The JPMorgan forecast coincided with similar expectations by other banks, which have been drastically cutting their growth projections for the US. This year since the announcement of tariffs. On Thursday, Barclays PLC announced that it foresees a contraction of GDP in 2025, “in line with a recession.”
On Friday, CITI economists reduced their growth forecast by 2025 to 0.1 %, and those of UBS reduced it to 0.4 %.
“We foresee that US imports from the rest of the world will fall more than 20% during our forecast horizon, mainly in the next quarters, which will return the percentage of GDP imports to the levels prior to 1986,” said Jonathan Pingle, chief economist of UBS.
“The forcefulness of the commercial policy measure implies a substantial macroeconomic adjustment for an economy of 30 billion dollars,” he added.
Feroli said that he hopes that the Federal Reserve begins to cut its reference interest rate in June and proceed with rates cuts at each subsequent meeting until January, placing it in a range of 2.75% to 3% from the current one from 4.25% to 4.5% as a tool to sustain the activity and fight against the recession. These cuts would occur despite an increase in a key indicator of the underlying inflation to 4.4% by the end of the year, from the current level of 2.8% that worries the Fed.
“The impact of the price increase that we foresee for the coming months could be stronger than that of the postpandemic inflationary peak, since the growth of nominal income has recently moderated, instead of accelerating in the previous episode,” Feroli wrote in that entity. “In addition, in an environment of greater uncertainty, consumers could be reluctant to resort to their savings to finance spending growth.”
“If completed, our staging forecast would raise a dilemma to those responsible for the Fed monetary policy,” Feroli wrote. “We believe that the substantial weakness of the labor market will prevail at the end, especially if it results in lower salary growth, which will give the committee greater confidence that a spiral of prices-salaries is not being consolidated.”