New Delhi, April 5 || Global brokerages and economists have warned an impending US recession after factoring in the impact of reciprocal tariffs announced by the Donald Trump administration.
According to JPMorgan Chase & Co, “We now expect real GDP to contract under the weight of the tariffs, and for the full year (4Q/4Q) we now look for real GDP growth of -0.3 per cent, down from 1.3 per cent previously,”
The bank’s chief US economist Michael Feroli said in a note to clients that the forecast contraction in economic activity is expected to depress hiring and over time to lift the unemployment rate to 5.3 per cent.
Feroli expects the US Federal Reserve to begin cutting its benchmark interest rate in June and proceed with rate cuts at each subsequent meeting through January next year.
“If realised, our stagflationary forecast would present a dilemma to Fed policymakers,” Feroli wrote.
Citi economists have cut their forecast for growth this year to just 0.1 per cent while UBS economists reduced their forecast to a mere 0.4 per cent.
UBS Chief US Economist, Jonathan Pingle, said in a note that “We expect US imports from the rest of the world fall more than 20 per cent over our forecast horizon, mostly in the next several quarters, bringing imports as a share of GDP back to pre-1986 levels.”