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JPMorgan says Trump’s tariffs to send US into recession

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JPMorgan Chase & Co. said it expects the US economy to fall into a recession this year after accounting for the likely impact of tariffs announced this week by the Trump administration.

“We now expect real GDP to contract under the weight of the tariffs, and for the full year (4Q/4Q) we now look for real GDP growth of -0.3%, down from 1.3% previously,” the bank’s chief US economist, Michael Feroli, said Friday in a note to clients, referring to gross domestic product.

“The forecasted contraction in economic activity is expected to depress hiring and over time to lift the unemployment rate to 5.3%,” Feroli said.

President Donald Trump’s announcement Wednesday of major tariffs on US trading partners around the world sent the S&P 500 index of US stocks to its lowest level in 11 months, wiping away $5.4 trillion of market value in just two trading sessions to close out the week.

Read More: Worst Stock Meltdown Since Covid Deepens as Recession Odds Soar

JPMorgan’s forecast came alongside similar changes from other banks, which have been slashing projections for US growth this year since the tariff announcement. On Thursday, Barclays Plc said it expects GDP to contract in 2025, “consistent with a recession.”

On Friday, Citi economists cut their forecast for growth this year to just 0.1%, and UBS economists dropped theirs to 0.4%.

“We expect US imports from the rest of the world fall more than 20% over our forecast horizon, mostly in the next several quarters, bringing imports as a share of GDP back to pre-1986 levels,” UBS Chief US Economist Jonathan Pingle said in a note. “The forcefulness of the trade policy action implies substantial macroeconomic adjustment for a $30 trillion economy.”

‘Stagflationary Forecast’

Feroli said he expects the Federal Reserve to begin cutting its benchmark interest rate in June and proceed with rate cuts at each subsequent meeting through January, bringing the benchmark into a 2.75% to 3% range from the current 4.25% to 4.5% range.

Those cuts would come despite a rise in a key measure of underlying inflation to 4.4% by the end of the year, from the current level of 2.8%.

Read More: Powell Says Fed in No Hurry to Cut as Markets Continue to Swoon

“If realized, our stagflationary forecast would present a dilemma to Fed policymakers,” Feroli wrote. “We believe material weakness in the labor market holds sway in the end, particularly if it results in weaker wage growth thereby giving the committee more confidence that a price-wage spiral isn’t taking hold.”

On Friday, Fed Chair Jerome Powell said “it feels like we don’t need to be in a hurry” to make any adjustments to rates. His comments followed the release of the latest monthly employment report from the Bureau of Labor Statistics, which showed robust hiring in March alongside a slight uptick in the unemployment rate, to 4.2%.

Investors are betting on a full percentage point of reductions by the end of the year, according to futures.

This story was originally featured on Fortune.com



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7 questions for Valvoline Global CEO Jamal Muashsher

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Trump signs orders targeting ‘Anonymous’ author and former top cybersecurity official who crossed him in first term: ‘Like a traitor’

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President Donald Trump intensified his efforts to punish his critics on Wednesday by signing a pair of memoranda directing the Justice Department to investigate two officials from his first administration and stripping them of any security clearances they may have.

Trump’s targeting of Miles Taylor, a former Department of Homeland Security official in Trump’s first term, and Chris Krebs, a former top cybersecurity official, came as the president has sought to use the powers of the presidency to retaliate against his adversaries, including law firms.

Trump also on Wednesday retaliated against another law firm, Susman Godfrey, as he seeks to punish firms that have links to prosecutors who have investigated him or employed attorneys he sees as opponents.

Although Trump has ordered security clearances to be stripped from a number of his opponents, including former President Joe Biden and former Vice President Kamala Harris, the president’s order Wednesday directing the Justice Department to broadly investigate the actions of Taylor and Krebs marks an escalation of Trump’s campaign of retribution since he returned to power.

Taylor, who left the Trump administration in 2019, was later revealed to be the author of an anonymous New York Times op-ed in 2018 that was sharply critical of Trump. The person writing the essay described themselves as part of a secret “resistance” to counter Trump’s “misguided impulses,” and its publication touched off a leak investigation in Trump’s first White House.

Taylor later published a book under the pen name “Anonymous” and publicly revealed his identity days before the 2020 election.

Trump said Wednesday that Taylor was “like a traitor” and that his writings about “confidential” meetings were “like spying.”

“I think he’s guilty of treason,” he said.

Taylor responded by saying Trump had proved his point.

“Dissent isn’t unlawful. It certainly isn’t treasonous. America is headed down a dark path,” he wrote on X.

Trump named Krebs the director of the Cybersecurity and Infrastructure Security Agency but became angered with him after he declared the 2020 election that Trump lost to be secure and the ballot counts to be accurate.

Krebs did not respond to a message seeking comment, but late Wednesday he shared on X a message he originally posted when he left government in 2020: “Honored to serve. We did it right.”

Trump has falsely claimed he was cheated out of reelection in 2020 by widespread fraud, despite a mountain of evidence to the contrary. Recountsreviews and audits in the battleground states where he disputed his loss all affirmed Biden’s victory. Judges, including some he appointed, rejected dozens of his legal challenges.

“It’s bizarre to see a president investigate his own administration and his own appointee,” said David Becker, a former Justice Department lawyer and coauthor of “The Big Truth,” a book about Trump’s 2020 election lies.

Becker noted that Krebs issued his reassurances about the security of the upcoming election for months during 2020 without pushback from the then-president, with Trump only souring on him after the votes were counted.

“The reason he can sit in the White House today and govern from that position is because our election system is secure and has accurately determined who has won the presidency,” Becker said.

Susman Godfrey, the firm Trump targeted in an order Wednesday, represented Dominion Voting Systems in a lawsuit that accused Fox News of falsely claiming that the voting company had rigged the 2020 presidential election. Fox News ultimately agreed to pay nearly $800 million to avert a trial.

The order bars the firm from using government resources or buildings, according to White House staff secretary Will Scharf.

In a statement, Susman Godfrey responded that people who know the firm know it takes seriously its duty to uphold the rule of law. “This principle guides us now,” the firm said. “There is no question that we will fight this unconstitutional order.”

Trump has issued a series of orders meant to punish firms, including by ordering the suspension of lawyers’ security clearances and revoking federal contracts. He’s succeeded in extracting concessions from some who have settled, but others have challenged the orders in court.

This story was originally featured on Fortune.com



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CEOs are reeling over the tariff chaos of the last few days: ‘My head is spinning right now’

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FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.



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