Okay, folks, let’s talk real talk. JPMorgan’s top economist, Bruce Kasman, just dropped a bombshell, and honestly, it’s a gut punch. He’s saying the sheer scale and destructiveness of current US trade policy are serious enough to shove both the US and the global economy right into a recession. Think about that for a second.
He puts the recession risk at a whopping 60%! Sixty percent! That’s not some academic exercise, that’s a legit “buckle up” moment. This isn’t some doom-and-gloom merchant talking either. This is JPMorgan’s head economist, usually a pretty measured voice.
Now, here’s where it gets a little… hopeful, maybe? Kasman still anticipates the Fed will start easing monetary policy in June. But here’s the kicker: they now foresee rate cuts at every meeting until January of next year, bringing the federal funds rate down to a maximum of 3.0%. So, they seem to be bracing for the worst. It’s a clear signal they’re preparing to fight a potential downturn with everything they’ve got.
Let’s unpack trade policy a little. Trade policies, which encompass tariffs, quotas, and other regulations, significantly influence a nation’s economic performance. When trade is restricted, access to cheaper goods is limited, raising costs for consumers and businesses. This can then impact investment and overall economic growth.
Furthermore, escalating trade tensions often lead to retaliatory measures. This creates a cycle of disruption, affecting global supply chains and increasing uncertainty for businesses. This uncertainty is the real killer—it stifles investment and hiring.
Monetary policy, usually through adjusting interest rates, and currency control, aims to manage inflation and foster economic stability. Lowering interest rates, as Kasman predicts, encourages borrowing and investment, but only addresses the symptoms not the core issue. It’s a Band-Aid on a gaping wound if the trade war keeps escalating. It feels like we’re walking a tightrope right now, and a single misstep could send us tumbling.
