JPMorgan believes the US economy will enter a recession in the back half of 2025 as the impact of President Trump tariffs takes hold in the economy.

The firm’s chief US economist Michael Feroli sees a two-quarter recession occurring in the back half of 2025 as GDP contracts by 1% in the third quarter of the year and by 0.5% in the fourth quarter. For the full-year 2025, Feroli’s team projects GDP will fall by 0.3%.

Feroli added that a “recession in economic activity” will push the unemployment rate up to 5.3%. New data from the Bureau of Labor Statistics released on Friday showed the unemployment rate stood at 4.2% in March. While other economists have noted the risks to recession are rising, JPMorgan marks the first major Wall Street research team to forecast a recession as Trump’s tariffs weigh on economic growth.

Broadly, economists have agreed that Trump’s reciprocal tariffs — which include broad 10% duties and further levies on select trading partners — will spike inflation and hamper economic growth. In Feroli’s base case, core PCE, the Fed’s preferred inflation gauge, would end 2025 at 4.4%. The February reading of core PCE showed prices increased 2.8%.

Source: Finance.yahoo