There is growing concern about the U.S. economy, with a significant chance of a recession this year. J.P. Morgan’s chief economist, Bruce Kasman, shared insights during a recent press conference in Singapore. He indicated that the probability of a recession has increased to about 40%, up from 30% at the beginning of the year. This shift reflects worries about the potential impact of current policies and international trade tensions.
Kasman has not changed his overall economic forecasts yet, but he noted that J.P. Morgan expects the U.S. GDP to grow by 2% this year. However, other financial institutions, like Goldman Sachs and Morgan Stanley, have lowered their growth predictions to 1.7% and 1.5%, respectively. The recent sharp decline in U.S. stock prices has also raised alarms among investors, who fear that President Trump’s proposed tariffs could further slow economic growth.
Kasman warned that if the tariffs Trump has threatened were to be implemented, the chances of a recession could rise above 50%. He emphasized that continued disruptive and business-unfriendly policies would only heighten these risks. The economist also pointed out that investor confidence in U.S. markets could be shaken if trust in governance is undermined.
He explained that the U.S. has long been seen as a safe place for investments, thanks to its strong rule of law and reliable information flow. However, recent changes in government policy and the dismantling of advisory committees could threaten this reputation. Kasman cautioned that these uncertainties might not be fully recognized in the current economic outlook.
He highlighted the concept of "exorbitant privilege," referring to the U.S.’s ability to finance its debts at lower costs and attract capital flows. However, he warned that this status could be at risk if the current trends continue.
As the economic landscape evolves, the implications of these factors will be closely watched by investors and policymakers alike.