JPMorgan boosts US recession chance to 35% by year-end

JPMorgan increased the likelihood of a U.S. recession by the end of this year to 35%, up from 25% at the beginning of July, citing weakening labor demand and early signs of job cuts.

Labor market concerns

U.S. economic news points to a sharper-than-expected decline in labor demand, according to a note from JPMorgan economists led by Bruce Kasman. The bank maintained the odds of a recession by the second half of 2025 at 45%.

“This modest increase in our assessment of recession risk contrasts with a more substantial reassessment we are making to the interest rate outlook,” Kasman and his colleagues wrote.

JPMorgan now predicts a 30% chance that the Federal Reserve will keep interest rates “high-for-long,” down from a 50-50 assessment just two months ago. With U.S. inflation pressures decreasing, JPMorgan anticipates the Fed will cut rates by half a percentage point in September and November.

Global impact

The realization of a “U.S./global recession” would likely trigger “a sharp and immediate easing” by central banks, the JPMorgan economists noted.

The bank’s revised recession risk follows a similar adjustment by Goldman Sachs Group Inc., which now estimates a 25% probability of a recession in 2025.