According to J.P. Morgan, “In light of heightened trade policy uncertainty, J.P. Morgan Research has raised the probability of a global recession to 40%. Both business sentiment and consumer confidence have slumped in the U.S., and a slowdown here could weigh on global growth. Against this rapidly evolving economic backdrop, J.P. Morgan Research still expects to see two more rate cuts this year.”
Once again, the “smart” money is completely missing the point and refuses to state the obvious. J.P. Morgan, one of the largest banks in the world, can’t bring themselves to declare the obvious: We’ll be in a recession immediately! Obviously, we won’t know officially until the National Bureau of Economic Research’s Business Cycle Dating Committee declares one after two quarters of contracting economic growth. Maybe they’ll declare one earlier if the crash is significant enough. Oh, wait. Who am I kidding? I forget who controls the NBER. It’s the executive branch, i.e., The Don! Thus, expect them never to declare a recession — ever. No matter how bad things get, they will never officially declare a recession. Mark my words! Other non-government institutions may unofficially “declare” a recession, but do not expect the government to tell citizens the truth. The truth will be dead in rough times!
Nonetheless, for the “braintrust” at J.P. Morgan to still forecast a less than 50/50 — at the time of this writing that is — chance of a recession is somewhat incomprehensible. As Reuters reported about Fitch Ratings, “The U.S. tariff rate on all imports has rocketed to 22% from just 2.5% in 2024 under the new global levies imposed by President Donald Trump, Fitch Ratings’ U.S. economic research chief said on Wednesday. ‘That rate was last seen around 1910,’ Olu Sonola, Fitch’s head of U.S. economic research, said in a statement after Trump’s announcement for a global baseline import tax of 10%, but much higher rates for many trading partners.” While many analysts will have many opinions and predictions, I think the warning from Fitch about returning to a time early in the last century should be a wake-up call for the markets and businesses. J.P. Morgan’s rather optimistic forecast really does speak to the fact that the big banks don’t want to poke the bear — Dictator Don. They still hold out hope that these tariffs will be less catastrophic than is apparent to everyone else. Whatever! After 10 years of the Dictator Don reality show, people are still — still to this very day — shell-shocked by everything he says and does to the point that they can’t think straight. Welcome to stupid America! Proving dumber one day at a time.