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JPMorgan Issues ‘High Alert’ Forecast as Trade Tensions Threaten Collapse
JPMorgan has issued a stark warning that tariffs could lead to a “self-inflicted wound,” pushing the U.S. into a recession marked by rising inflation, falling earnings, and evaporating trust—potentially triggering a global economic crash.
The JPMorgan executive forecasted that if current tariffs remain in place, they could raise inflation by “+1–2%” and deal comparable damage to economic growth. He cautioned:
“If the announced U.S. tariffs persist and no further retaliatory escalation occurs, growing concern over slow growth and high inflation could evolve into something worse — a race toward recession. A self-inflicted wound.”
He advised investors to closely monitor the yield on 10-year Treasury bonds, as a drop would indicate markets increasingly pricing in recession risk. He also pointed to overly optimistic corporate earnings forecasts:
“I expect this year’s 10% earnings growth projections to be revised down. The same applies for next year.”
Madigan compared the U.S. trade stance to an overly aggressive opening move in negotiations:
“We’re watching a real-time ‘Negotiation 101’ lesson. It starts with anchoring.”
But when the opening bids are “absurdly high,” he warned, trust breaks down.
“Nobody is happy with the announced tariffs except the President,” he wrote, suggesting the current strategy risks alienating trade partners and dragging the global economy down.
On monetary policy, he dismissed expectations of four Federal Reserve rate cuts this year, saying:
“That seems unlikely to me. I’m leaning toward one in the second half. If growth drops sharply, maybe two. Time will tell.”
With weakening consumer spending and potential corporate hiring cuts, the JPMorgan executive concluded:
“Tail risks are elevated, markets are not cheap, and the outlook is uncertain.”
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