Michael Feroli, JPMorgan’s Chief US Economist, says the risk of recession is declining as concerns of a global trade war recede. The predicted risk is now under 50%.
As widely reported, JP Morgan (NYSE:JPM) has adjusted its prediction that economic upheaval could cause economic growth to reverse. Just last month, JPM Research said the risk of recession stood at 60%, rising from 40%. The bank explained that with the 10% tariff sticking and the 145% tariff targeting China, these policies could drive the US economy into recession.
The Trump administration recently revealed a 90-day pause while sharing that they were in talks with Chinese authorities to work out a deal. The world breathed a sigh of relief, and markets rallied.
Economic growth in the US is now expected to be 0.6% in 2025, up from the previous anticipated amount of 0.2%.
Pro-GOP accounts were quick to claim victory over the naysayers, who predicted an economic demise due to the aggressive tariff policy. Perhaps another question should be if Donald Trump blinked as he saw calamity in the near future.
🚨JPMorgan just announced that they’re DITCHING their prediction that the United States will head into a 2025 recession.
The people who doubted the Golden Age of America have a lot of tweets to delete. 🇺🇸 pic.twitter.com/njqsTrv7Dq
— Townhall.com (@townhallcom) May 13, 2025
At the same time, some touted the increased level of investment the Trump administration has generated by using its stick-and-carrot approach.
The Trump Administration is currently tallying total direct investment of around $5.1 trillion, including $3 trillion in foreign direct investment. At the meeting in Saudi Arabia this week, it has been reported that the Trump administration was hoping to raise another $1 trillion in investment.
Of course, some parties may renege or reduce the amount committed. Capital investments can take time—factories can take several years—so it will take history to determine if Trump’s claims hold true.
Additionally, expectations for a rate cut have been tempered as accelerated growth could compel the Fed to hold out a bit longer. Today, the first rate cut is anticipated toward the year’s end or in early 2026.
But with dozens of trade deals in the works and China itching to negotiate, risk-on has returned and markets are celebrating, as clear sailing is ahead, at least for the moment.