JPMorgan predicts US economy will experience stagflationary slowdown due to tariffs, with a 40% chance of recession

According to ChainCatcher, citing Jinshi Data, JPMorgan analysts stated in a mid-year outlook research report on Wednesday that U.S. tariff policies could weigh on global economic growth and reignite inflation in the United States. The bank estimates there is a 40% chance the U.S. will fall into recession in the second half of this year. U.S. economic growth in 2025 is projected at 1.3%, down from the 2% forecast at the beginning of the year. “The stagflationary effect of higher tariffs is the reason we have lowered our GDP growth expectations for this year,” the report said.

JPMorgan is bearish on the U.S. dollar, citing slowing U.S. economic growth, while growth-supportive policies outside the U.S. are expected to boost other currencies, including those of emerging markets. The bank expects the Federal Reserve to cut interest rates by 100 basis points between December and the spring of 2026. Analysts noted that if a recession occurs or the economic slowdown is more severe than expected, it could trigger a more aggressive rate-cutting cycle. However, the bank remains optimistic about the U.S. stock market, reasoning that despite policy uncertainties, both consumers and the economy continue to show resilience.