JPMorgan has revised its US recession forecast due to a recent tariff truce between President Trump and China, reducing recession probabilities from 60% to below 50%. This analysis follows a dramatic lowering of effective tariffs from 24% to 14%, equating to nearly $300 billion in tax relief. Chief economist Michael Feroli indicated this should alleviate consumer spending pressures. However, while economic growth projections have been adjusted upwards, warning signs about elevated recession risks remain, reflecting the volatile economic landscape despite recent market rallies.
The administration's recent dialing down of some of the more draconian tariffs placed on China should reduce the risk that the US economy slips into recession this year.
Most of that prior tax was likely to have been borne by US consumers in the form of higher prices. The rolling back of this tax should provide some relief to consumer spending.
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