*Walter Bloomberg|Apr 05, 2025 14:56
SUMMARY OF JPMORGAN’S REVISED OUTLOOK (APRIL 2025):
🔸 GDP Growth: JPMorgan Chase now expects U.S. real GDP to shrink by -0.3% for the year, down sharply from the previous +1.3% projection.
🔸 Unemployment: Forecasted to rise to 5.3% due to weaker economic activity.
🔸 Inflation: Core PCE inflation revised up to 4.4%, an increase of 1.4 percentage points, driven mainly by new tariffs.
Federal Reserve Policy:
🔸 Easing expected to start in June.
🔸 Rate cuts anticipated at every meeting through January, potentially bringing the top of the federal funds rate down to 3.0%.
🔸 Risk lies more in delayed easing rather than earlier action.
Tariffs' Effects:
🔸 Higher inflation will erode real income and consumer spending.
🔸 Export volumes are expected to suffer due to retaliatory tariffs, especially from China.
Consumer Behavior:
🔸 Households may be reluctant to dip into savings to maintain spending levels amid growing uncertainty.
Timing of Weakness:
🔸 The third and fourth quarters of the year will likely see the worst economic performance, partly due to a reversal of Q1 dynamics (imports/inventories).
Stagflation Risk:
🔸 Feroli sees this as a stagflationary environment: high inflation + slowing growth + rising unemployment.
🔸 However, he believes weakness in the labor market could ultimately calm the Fed’s inflation fears, particularly if wage growth softens.
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