Agencies
There is roughly a 40% chance of a U.S. recession this year and a risk of lasting damage to the country’s standing as an investment destination if the administration undermines trust in U.S. governance, said the chief economist of the banking giant JPMorgan.
“Where we stand now is with a heightened concern about the U.S. economy,” Bruce Kasman, the U.S. investment bank’s chief global economist, told reporters in Singapore on Wednesday.
He said he has not yet revised any forecasts but put a roughly 40% recession risk into the outlook – up from about a 30% chance he had reckoned on at the start of the year. JPMorgan’s current forecast is for 2% U.S. gross domestic product (GDP) growth this year.
U.S. stocks have suffered their sharpest sell-off in months over recent days as investors have grown nervous that President Donald Trump will slow the economy with import duties.
Of economists polled by Reuters last week across Canada, Mexico and the U.S., 95% said recession risks in their economies had increased as a result of Trump’s tariffs.
Last week, economists at Goldman Sachs and Morgan Stanley downgraded their U.S. GDP growth forecasts and now see growth at 1.7% and 1.5% this year, respectively.
Kasman said the recession risk would rise, probably to 50% or above, if reciprocal tariffs that Trump has threatened to impose from April were to meaningfully come into force.
“If we would continue down this road of what would be more disruptive, business-unfriendly policies, I think the risks on that recession front would go up,” Kasman said.
He also said that discomfort around the administration’s style could shake investor faith in U.S. assets if it challenged trust, built over many years, in U.S. markets and institutions.
“The U.S. seems to have established itself as a place where people can be comfortable about rule of law ... comfortable about the integrity of information flow, and they can be comfortable that the government isn’t going to be, in unexpected ways, getting involved in the rules of the game,” he said.
