JPMorgan Forecasts U.S. Recession After Trump Hikes Tariffs

JPMorgan believes the U.S. economy will enter a recession in the second half of 2025 as the impact of President Trump's tariffs takes hold, Josh Schafer reported for Yahoo Finance.

JPMorgan is the first major Wall Street research team to formally forecast a downturn as Trump’s tariffs begin to weigh on economic growth.

The firm’s chief U.S. economist, Michael Feroli, forecasts a two-quarter recession, with GDP contracting by 1% in the third quarter and by 0.5% in the fourth quarter. For the full year 2025, Feroli’s team projects GDP will fall by 0.3%.

“We now expect real GDP to contract under the weight of the tariffs,” Feroli wrote in a note to clients on Friday night. He added that a "recession in economic activity" will push the unemployment rate up to 5.3%.

New data from the Bureau of Labor Statistics (BLS), released on Friday, showed the unemployment rate stood at 4.2% in March.

While other economists have noted rising recession risks, JPMorgan is the first major Wall Street research team to formally forecast a downturn as Trump’s tariffs begin to weigh on economic growth.

“The pinch from higher prices that we expect in coming months may hit harder than during the post-pandemic inflation spike, as nominal income growth has been moderating recently, as opposed to accelerating in the earlier episode,” Feroli wrote.

“Moreover, in an environment of heightened uncertainty, consumers may be reluctant to dip too far into savings to finance spending growth.”