JP Morgan drops US recession risk below 50% as Trump strikes China trade deal

JP Morgan has lowered its prediction that the US will plunge into recession to "below 50 percent" as the Trump administration struck a deal with China for both countries to lower their tariffs for the next 90 days.

The firm had previously predicted that there was a 60 percent chance of recession taking place in 2025, but said on Tuesday in the wake of the deal with China, "The administration’s recent dialing down of some of the more draconian tariffs placed on China should reduce the risk that the U.S. economy slips into recession this year. We believe recession risks are still elevated, but now below 50%," JPMorgan Chief US Economist Michael Feroli wrote.

JPMorgan predicts that the US economy will grow by 0.6 percent in 2025, which is a large jump from their initial prediction of 0.2 percent growth. Feroli also predicts that inflation will rise less than expected because of the lowering of the tariffs.