After the China-U.S. trade truce, Morgan Stanley "withdrew" its recession theory for the U.S. economy
After the temporary trade agreement between China and the United States, JPMorgan Chase raised its expectations for U.S. economic growth and withdrew its previous forecast of a recession in the U.S. economy in 2025. The chief economist of JPMorgan Chase pointed out that reducing tariffs on China will lower the risk of a U.S. recession, with an expected economic growth of 0.6% in 2025. At the same time, the core inflation indicator is expected to rise to 3.5%. The labor market outlook indicates that the slowdown in labor demand will exceed supply, and the expected timing for the Federal Reserve to cut interest rates will be postponed to December
According to the Zhitong Finance APP, after the temporary trade agreement between China and the United States, JPMorgan Chase has raised its expectations for U.S. economic growth and no longer insists on its previous prediction that "the United States, the world's largest economy, will fall into recession by 2025."
JPMorgan Chase's Chief U.S. Economist Michael Feroli pointed out in a report on Tuesday: "The U.S. government has recently reduced some of the harsh tariffs on China, which should lower the risk of the U.S. economy falling into recession this year. We believe the risk of recession still exists, but it has now fallen below 50%."
Feroli stated that the bank currently expects the U.S. economy to grow by 0.6% in 2025, up from the previous expectation of 0.2%. Meanwhile, a key measure of core inflation—the Personal Consumption Expenditures Price Index (PCE), excluding food and energy—is expected to rise to 3.5%, rather than the previously expected 4%.
He also mentioned: "We still expect a slight decline in employment later this year, as the expected slowdown in labor demand will exceed the labor supply. Our updated labor market outlook shows that the urgency for immediate action to curb employment risks has decreased; for the Federal Reserve, we expect the timing for resuming interest rate cuts to be pushed back from September to December."
