JPMorgan sees a greater chance of a US recession this year
foxbusiness.comNew Century Advisors chief economist Claudia Sahm weighs in on the Fed's next rate move on 'Varney & Co.'
JPMorgan Chase analysts now see a greater chance that the U.S. economy will enter a recession by the end of the year.
In a Wednesday analyst note, JPMorgan economists led by Bruce Kasman raised the odds of an economic downturn this year to 35%, up from their previous 25% estimate, citing easing labor market pressures.
«U.S. wage inflation is now slowing in a manner not seen in other DM [developed market] economies,» they wrote. «Easing labor market conditions increase confidence both that service price inflation will move lower and that the Fed's current policy stance is restrictive.»
They still see a 45% chance of a recession in the second half of 2025.
US JOB GROWTH SLOWS TO 114K IN JULY WHILE UNEMPLOYMENT UNEXPECTEDLY JUMPS
The JPMorgan Chase logo is seen at its headquarters building in New York City on May 26, 2023. (Michael M. Santiago/Getty Images / Getty Images)
The economists also lowered the odds that the Federal Reserve keeps interest rates higher for longer to just 30%. With inflation easing, JPMorgan expects the central bank to cut rates twice this year, in September and November.
«This modest increase in our assessment of recession risk contrasts with a more substantial reassessment we are making to the interest rate outlook,» they wrote.
INTEREST RATE CUTS ARE ON THE HORIZON, BUT HIGH MORTGAGE RATES COULD BE HERE TO STAY
The analyst note comes on the heels of the disappointing July jobs report, which showed that total nonfarm payrolls grew by just 114,000 in July, while the jobless rate unexpectedly jumped to 4.3%. The report reignited fears of a slowing economy, because it triggered the so-called
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