J.P. Morgan: "U.S. Economy to Slow Down in H2"…Risk of Stagflation from Tariffs
Summary
- J.P. Morgan warned that the U.S. economic growth could slow down due to the stagflation risk arising from President Donald Trump’s tariff policy.
- J.P. Morgan announced that it has revised its forecast for this year’s U.S. economic growth rate down from 2% to 1.3%.
- J.P. Morgan stressed that due to the weakening dollar and declining demand for U.S. Treasuries, the term premium on U.S. Treasuries could rise by 40–50bp.
J.P. Morgan, a U.S. investment bank, warned that stagflation (inflation during an economic slowdown) triggered by President Donald Trump's tariff policy could slow down the growth of the United States economy.
In its report on the 25th (local time), J.P. Morgan emphasized, "The shock of stagflation caused by high tariffs is a downside risk to this year’s GDP growth forecast," adding that "the risk of recession remains high." Although J.P. Morgan initially forecasted the U.S. economic growth for this year at 2%, it has now lowered its estimate to 1.3%.
According to this investment bank, the possibility of the U.S. economy falling into a recession in the second half of the year is about 40%. J.P. Morgan also predicted, "With the continued weakness of the dollar as well as a declining share of foreign entities and the Federal Reserve (Fed) and commercial banks in demand for U.S. Treasury bonds, the term premium (additional yield required for longer-maturity bonds) on U.S. Treasuries may rise by 40–50bp."
Suji Na, suji@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
