The "Cosmic Bank" has officially given the United States a "diagnosis": Under the heavy pressure of tariffs, the United States will experience a recession this year

JPMorgan Chase's latest forecast indicates that the global tariff policy announced by the Trump administration will lead the United States into an economic recession this year. This policy has already caused a stock market crash, and investors need to be wary of the risk of "stagflation," while also anticipating that the Federal Reserve may be forced to accelerate interest rate cuts.

In a client report released on Friday, JPMorgan significantly lowered its economic outlook for the United States. The bank's chief U.S. economist, Michael Feroli, stated, "We now expect real GDP to contract under the pressure of tariffs, with real GDP growth for the year (year-over-year in the fourth quarter) at -0.3%, down from our previous forecast of 1.3%."

This concerning assessment further pointed out, "The expected contraction in economic activity will suppress hiring and, over time, raise the unemployment rate to 5.3%."

This forecast directly responds to President Trump's announcement on Wednesday of a large-scale tariff plan against global trading partners. This news has already led to a stock market crash in the U.S., with the S&P 500 index falling to its lowest point in 11 months, evaporating $5.4 trillion in market value in just two trading days.

Wall Street Generally Lowers Growth Expectations

JPMorgan is not the only institution adjusting its expectations. Since the announcement of the tariffs, several banks have lowered their economic growth forecasts for the U.S. this year:

• Barclays stated on Thursday that it expects GDP to contract in 2025, "consistent with a recession."

• Citigroup economists on Friday lowered their growth forecast for this year to just 0.1%.

• UBS economists reduced their expectation to 0.4%.

UBS's chief U.S. economist, Jonathan Pingle, warned in the report, "We expect U.S. imports from the rest of the world to decline by more than 20% during our forecast period, primarily concentrated in the next few quarters, bringing the share of imports in GDP back to levels seen before 1986. This strong trade policy action means that the $30 trillion U.S. economy will undergo a significant macroeconomic adjustment."

"Stagflation Forecast" as a Warning for Investors

Particularly noteworthy for investors is the potential emergence of "stagflation"—the coexistence of economic stagnation and inflation. Feroli expects the Federal Reserve to begin cutting interest rates in June and to continue cutting rates at subsequent meetings until January next year, lowering the benchmark rate from the current range of 4.25%-4.5% to a range of 2.75%-3%.

However, these rate cuts will occur against a backdrop of core inflation indicators rising from the current 2.8% to 4.4% by the end of the year.

"If realized, our stagflation forecast will present a dilemma for Federal Reserve policymakers," Feroli wrote. "We believe that substantial weakness in the labor market will ultimately prevail, especially if it leads to weaker wage growth, thereby giving the committee more confidence that a price-wage spiral will not occur."

The Complex Choices Facing the Federal Reserve

Despite the increasing economic risks, Federal Reserve Chairman Jerome Powell stated on Friday, "It feels like we don't need to rush" to adjust interest rates. His remarks came after the U.S. Bureau of Labor Statistics released the March employment report, which showed strong job growth but a slight increase in the unemployment rate to 4.2% In stark contrast, futures market investors are currently betting that the Federal Reserve will cut interest rates by one percentage point before the end of this year, indicating that concerns about the risk of economic recession are rising.

For investors, this situation means preparing for a complex environment where both economic growth is slowing and inflationary pressures persist. Trump's tariff policy is reshaping the outlook for the U.S. economy, potentially leading to the most severe market adjustment since the pandemic in 2020