JP Morgan ratcheted up its odds for a US and global recession to 60 per cent, as brokerages scrambled to revise their forecast models with tariff distress threatening to sap business confidence and slow down global growth.
The Trump administration imposed tariffs on dozens of countries earlier this week. China retaliated yesterday with its own levies on US goods, adding to worries about an escalating trade war and wreaking havoc on global financial markets. J.P.Morgan said it now sees a 60pc chance of the global economy entering recession by year end, up from 40pc previously.
“Disruptive US policies have been recognised as the biggest risk to the global outlook all year,” the brokerage said in a note on Thursday, adding that the country’s trade policy has turned less business friendly than anticipated.
S&P Global also raised its “subjective” probability of a US recession to between 30pc and 35pc, from 25pc in March.
Last week, before the April 2 tariff announcement, Goldman Sachs also raised the probability of a US recession to 35pc from 20pc, noting economic fundamentals were not as strong as in the previous years. HSBC said on Thursday that the recession narrative will gain traction, but added some of this is already “priced in”.
Other research firms including Barclays, BofA Global Research, Deutsche Bank, RBC Capital Markets and UBS Global Wealth Management also warned the US economy faces a higher risk of slipping into a recession this year if Trump’s new levies remain in place.
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