On June 26, JPMorgan Chase released its mid-year economic outlook report, warning that the US economy could fall into a state of stagflation due to negative impacts from tariff policies. The bank's economists estimate that the probability of the US economy entering recession in the second half of 2025 is about 40%, lower than their previous forecast of 50% in April.
According to JPMorgan, the current tariff policy may slow global economic growth while putting pressure back on inflation in the US. The US GDP growth for 2025 is currently forecast to reach only 1.3%, significantly lower than the 2% forecast at the beginning of the year. JPMorgan stated: 'The impact of stagflation due to tariffs is the reason we lowered our GDP growth forecast for this year.'
Additionally, JPMorgan has a less optimistic view on the outlook for the USD. The bank forecasts a slowdown in the US economy, combined with growth stimulus policies in many other regions around the world, which will weaken the greenback and support the appreciation of other currencies, including those of emerging markets.
Regarding monetary policy, JPMorgan expects the Federal Reserve (Fed) to cut interest rates by a total of 100 basis points from December 2025 to Spring 2026. Experts state that if the US economy falls into recession or weakens more than expected, the Fed may implement a stronger rate-cutting cycle.
However, despite the risks and policy uncertainties, JPMorgan maintains a positive outlook on the US stock market. The bank believes that consumer spending and the economic foundation still demonstrate resilience, serving as an important support for the market's growth momentum.
Source: Allinstation by HC Capital
