By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News. August 8, 2024. Article no 1153.

Dow Jones Stock Exchange, Manhattan, New York City- Photo credit : Swann Collins.

Analysts at the American bank JP Morgan Chase increased the likelihood of a recession in the United States by the end of this year from the previous 25% to 35%. Financiers believe that the situation in the economy may be worsened by less than previously expected activity in the labor market. By the second half of 2025, negative phenomena in the economy may intensify, so JP Morgan believes that the probability of a recession by this period is already 45%.

This adjustment is attributed to signs of a weakening labor market and early indications of layoffs, as well as a deceleration in wage inflation. The July jobs report, which fell short of expectations, has also contributed to these concerns. Additionally, global stock markets have experienced significant declines, further intensifying recession fears.

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Bank analysts believe that in order to stimulate the economy, the US Federal Reserve may cut the discount rate twice by 50 bps – in September and November. As you know, investors’ concerns about the US economy and the Fed’s policy of interest rates were one of the reasons for the recent sell-off in stock markets. Many analysts believe that the Fed is delaying rate cuts and this could lead to a recession in the United States.

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JPMorgan anticipates that the Federal Reserve will cut interest rates by at least 100 basis points by the end of the year, departing from a gradualist approach.

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© Copyright 2024 – Eurasia Business News. Article No. 1153