- JPMorgan increases U.S. recession probability to 35% due to weak July jobs report and global market downturn.
- Goldman Sachs raises U.S. recession odds to 25%, reflecting increased economic risks and market volatility.
- JPMorgan’s Dimon sees a recession likely but acknowledges a 35%-40% chance of a “soft landing” for the U.S. economy.
JPMorgan has adjusted its forecast for a potential U.S. recession by the end of 2024, raising the probability to 35%. Previously, the bank had maintained a 25% chance of an economic downturn. This revision comes in response to growing pressures in the labor market and recent developments in global finance.
Notably, the July jobs report delivered weaker-than-expected results, fueling concerns about the U.S. economy’s trajectory. Moreover, these fears intensified after global markets experienced a huge downturn earlier this week, a turbulent start to August.
Labor Market Struggles and Global Market Reactions
The weaker July jobs report has been a pivotal factor in JPMorgan’s reassessment. The data, which fell short of expert predictions, heightened recessionary fears across the financial sector. Earlier this week, global equity markets faced a sharp sell-off, triggered by a combination of recession worries and geopolitical uncertainties.
The sell-off was particularly severe, with Japan’s stock market suffering its worst single-day loss in history. Meanwhile, the U.S. stock market saw a a huge some of $2 trillion wiped out, highlighting the extent of market anxiety.
Goldman Sachs Follows Suit, Adjusts Recession Probability
In addition to JPMorgan’s revised forecast, Goldman Sachs has also increased its recession probability. The firm now sees a 25% chance of the U.S. economy slipping into recession within the next 12 months, up from its previous estimate.
This adjustment, like JPMorgan’s, was influenced by the recent market volatility and labor market data. Goldman Sachs’ update reflects a broader sentiment shift within the financial industry, as economic indicators continue to suggest mounting risks.
JPMorgan CEO Jamie Dimon Weighs In on Economic Outlook
JPMorgan CEO Jamie Dimon recently shared his perspective on the U.S. economy, emphasizing the uncertainty that currently surrounds the financial sector. In a CNBC interview, Dimon noted that while a recession seems increasingly likely, the possibility of a “soft landing” remains on the table, with odds between 35% and 40%.
However, Dimon expressed skepticism regarding the Federal Reserve’s ability to achieve its 2% inflation target, especially given the expected interest rate cuts in September. The Fed is anticipated to reduce rates by at least 100 basis points before the year’s end, in response to the ongoing economic challenges.
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