JPMorgan sees a greater chance of a US recession this year

Article Synopsis
JPMorgan Chase analysts have increased the likelihood of a U.S. recession by the end of the year to 35%, up from 25%, citing easing labor market pressures and slowing wage inflation. This shift suggests confidence that service price inflation will decrease and that the Federal Reserve’s policy remains restrictive. However, they still predict a 45% chance of a recession in the second half of 2025.
The analysts also reduced the likelihood of the Federal Reserve maintaining high interest rates to 30%, anticipating two rate cuts in September and November due to easing inflation. This change comes after a disappointing July jobs report, which showed nonfarm payrolls grew by just 114,000, and the unemployment rate unexpectedly rose to 4.3%.
The rise in unemployment triggered the Sahm Rule, an early recession indicator, as the three-month average jobless rate increased by 0.63 percentage points compared to the previous year’s low.