Forbes Recession Tracker: JPMorgan's Jamie Dimon Says Recession ‘Probably' Coming
The head of the U.S.' largest bank, economists and a former top-ranking White House economic official all warn the U.S. will likely tip into a recession as President Donald Trump's tariffs go into effect, reflecting the bloodbath on Wall Street over the last five days in response to the economic policies threatening to bring higher inflation and far weaker economic growth.
In a Wednesday morning interview, JPMorgan Chase CEO Jamie Dimon told Fox Business' 'Mornings With Maria' he believes a tariff-spurred recession is 'probably' a 'likely outcome,' adding he's heard 'recessionary talk' in conversations with other business leaders.
'We haven't had any slowdown or real recession...in so long,' Dimon continued, adding he expects 'more credit problems than people have seen in a long time.'
Lawrence Summers, the former Treasury Secretary during President Bill Clinton's term, told Bloomberg on Tuesday it's 'more likely than not' the tariffs will send the U.S. into a recession, adding to a growing chorus of economists sounding that warning.
Summers predicted such a downturn would leave an additional 2 million Americans unemployed, a more than 28% increase from the 7.1 million unemployed Americans in March, and a $5,000 or greater decline in annual household income.
Goldman Sachs economists hiked their odds of a recession over the next year to 45% in a downbeat note to clients Sunday, far higher than the 20% probability they held in late March and cautioning that without any capitulation from Trump, their baseline economic forecast is for a recession.
Economists at JPMorgan, the U.S.' largest bank by assets and market capitalization, issued an even starker 60% recession odds in a scathing Friday note, labeling Trump's policies as the 'largest tax increase' since 1968 which will 'fall heavily on the US consumer.'
'The fact that everything is sort of happening under the [International Emergency Economic Powers Act] and there's sort of no process is adding to the uncertainty,' Arend Kapteyn, UBS Investment Bank's chief economist, told reporters Monday, adding numerous economic surveys are 'already effectively at recessionary levels,' surpassing those seen during the height of the Great Recession.
The UCLA Anderson School of Management published last month an official 'Recession Watch' for the first time in its 73 years of economic forecasts, as economist Clement Bohr issued a scathing assessment of Trump's economic policies, writing the Recession Watch 'serves as a warning to the current administration: Be careful what you wish for because, if all your wishes come true, you could very well be the author of a deep recession.' A recession is 'entirely avoidable' if Trump's signature economic policies, including the most severe tariffs in nearly a century and the public sector's dismantling at the hands of Elon Musk's Department of Government Efficiency (DOGE), are 'pared back or phased in more gradually,' according to Bohr.
Stock prices don't completely correlate with economic growth, but equity investors are clearly pricing in significantly increased odds of a down stretch for the U.S. economy. The S&P 500 briefly dove into a 20% bear market earlier Monday, wiping out about $10 trillion in market value, led by stocks considered the most vulnerable to a slowdown, including artificial intelligence darling Nvidia and Elon Musk's Tesla. But markets are still pricing 'nowhere close to the worst case' scenario, Bhanu Baweja, UBS Investment Bank's chief strategist, said Monday.
Ahead of the 'Liberation Day' announcement last week, Trump braced Americans for a possible recession. In a Fox News interview aired March 9, he would not rule out the possibility of a recession, cautioning Americans for a period of economic 'transition' as his policies take hold and noting he's paying little attention to stock market losses. In subsequent media appearances, Treasury Secretary Scott Bessent similarly declined to dismiss a potential recession and said the U.S. will go through a 'detox period.' Bessent told NBC's 'Meet the Press' in an interview he believes it 'would have been much healthier if someone had put the brakes' on ahead of the Great Recession. 'Be Strong, Courageous, and Patient, and GREATNESS will be the result!,' Trump wrote on his Truth Social platform Monday.
The technical definition of a recession is two consecutive quarters of negative growth in gross domestic product, a comprehensive measure of all goods and services produced in a country. The official quarterly GDP stats haven't turned negative yet, but the Atlanta Federal Reserve's real-time model ignited concerns by calling for -1.8% annual GDP growth in 2025's first quarter, which would be the worst reading since 2020—though the estimate is likely skewed by its methodology, including how it accounts for a surge in gold imports.
Elsewhere in financial markets, a flight to government-issued debt is evidence of a thirst for safer returns in the face of a potential recession, as yields for benchmark 10-year Treasury bonds have dropped by more than 30 basis points over the past two months (lower yields mean bonds got more valuable). But the most common bond market signal of a recession, the inversion of the yield curve, in which longer-term bonds have lower yields than shorter-dated ones, has actually normalized in recent months. The New York Fed's bond-linked recession model calls for just 30% recession odds over the next year, down from the more than 70% odds in late 2023, a period which failed to materialize into a full-blown recession.
Perhaps the most concerning signal over the last is a breakdown in everyday Americans' conviction in the economy, as the Conference Baord's closely watched consumer confidence survey tumbled this month to its lowest level since 2021. That tracks with weaker spending, as February retail sales grew by just 0.2% from January to February, according to a report released March 17 by the Census Bureau, far worse than the 0.6% month-over-month increase projected by economists.
One of the most important hallmarks of the American economy, the labor market has shown some cracks in early 2025 as job creation slowed and layoffs spiked, but remains overwhelmingly strong, as March's 4.2% unemployment rate sits well within the healthy historic norm. A key labor market recession indicator, the Sahm rule, flashes a far lower likelihood of a recession than it did when it peaked last summer, inspiring a short-lived market selloff in August.
Trading in two of the world's most precious commodities certainly point to the prospect of a global recession. Gold prices are up more than 10% this year to a record $3,000 per troy ounce as investors flood into the historic safe haven asset, while prices for international benchmark Brent Crude sank this month to their lowest point since 2021 as traders braced for a potential global weakening in oil demand as economic activity slows.
Bessent and Trump have made clear they are lasered in on lowering interest rates, which are determined by the politically independent Fed. Typically, rates are only drastically cut during periods of economic distress, as lower rates typically stimulate economic growth as households and businesses are more likely to borrow with lower interest costs, though that uptick in loan activity can simultaneously lead to higher inflation as demand rises. The Fed is likely to hold off on further rate cuts 'until tariff policy becomes clearer,' according to David Mericle, Goldman's chief U.S. economist.
Bank of America's monthly survey of global fund managers released this month revealed some 63% of these influential investors expect the global economy to weaken over the next year, making March the second biggest jump in macroeconomic pessimism since the poll's 1994 inception. The survey also revealed fund managers fled to cash this month at the highest rate since March 2020 and moved away from U.S. stocks at their fastest pace on record, signaling an unraveling of faith in stateside equities. The fund managers heavily agree White House policy is the single biggest risk, with 55% of respondents citing a tariff-driven trade war sending the global economy into a recession as the top threat and 13% naming actions from Elon Musk's Department of Government Efficiency sending the U.S. into a recession as the biggest risk. The Bank of America survey was conducted March 7-13 among 205 global fund managers who collectively manage $477 billion in assets.
One Community. Many Voices. Create a free account to share your thoughts.
Our community is about connecting people through open and thoughtful conversations. We want our readers to share their views and exchange ideas and facts in a safe space.
In order to do so, please follow the posting rules in our site's Terms of Service. We've summarized some of those key rules below. Simply put, keep it civil.
Your post will be rejected if we notice that it seems to contain:
User accounts will be blocked if we notice or believe that users are engaged in:
So, how can you be a power user?
Thanks for reading our community guidelines. Please read the full list of posting rules found in our site's Terms of Service.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
Defying debt warnings, Republicans push forward on Trump tax agenda
By David Morgan WASHINGTON (Reuters) -U.S. President Donald Trump and his Republican allies in Congress are determined to enact his tax-cut agenda in a political push that has largely abandoned longtime party claims of fiscal discipline, by simply denying warnings that the measure will balloon the federal debt. The drive has drawn the ire of Elon Musk, a once-close Trump ally and the biggest donor to Republicans in the 2024 election, who gave a boost to a handful of party deficit hawks opposed to the bill by publicly denigrating it as a "disgusting abomination," opening a public feud with Trump. But top congressional Republicans remain determined to squeeze Trump's campaign promises through their narrow majorities in the Senate and House of Representatives by July 4, while shrugging off warnings from the official Congressional Budget Office and a host of outside economists and budget experts. "All the talk about how this bill is going to generate an increase in our deficit is absolutely wrong," Senate Finance Committee Chairman Mike Crapo told reporters after a meeting with Trump last week. Outside Washington, financial markets have raised red flags about the nation's rising debt, most notably when Moody's cut its pristine "Aaa" U.S. credit rating. The bill also aims to raise the government's self-imposed debt ceiling by up to $5 trillion, a step Congress must take by summer or risk a devastating default on $36.2 trillion in debt. "Debt and deficits don't seem to matter for the current Republican leadership, including the president of the United States," said Bill Hoagland, a former Senate Republican aide who worked on fiscal bills including the 1997 Balanced Budget Act. The few remaining Senate Republican fiscal hawks could be enough to block the bill's passage in a chamber the party controls 53-47. But some have appeared to be warming to the legislation, saying the spending cuts they seek may need to wait for future bills. "We need a couple bites of the apple here," said Republican Senator Ron Johnson of Wisconsin, a prominent fiscal hardliner. Republicans who pledged fiscal responsibility in the 1990s secured a few years of budget surpluses under Democratic former President Bill Clinton. Deficits returned after Republican President George W. Bush's tax cuts and the debt has pushed higher since under Democratic and Republican administrations. "Thirty years have shown that it's a lot easier to talk about these things when you're out of power than to actually do something about them when you're in," said Jonathan Burks, who was a top aide to former House Speaker Paul Ryan when Trump's Tax Cuts and Jobs Act was enacted into law in 2017. "Both parties have really pushed us in the wrong direction on the debt problem," he said. Burks and Hoagland are now on the staff of the Bipartisan Policy Center think tank. DEBT SET TO DOUBLE Crapo's denial of the cost of the Trump bill came hours after CBO reported that the legislation the House passed by a single vote last month would add $2.4 trillion to the debt over the next 10 years. Interest costs would bring the full price tag to $3 trillion, it said. The cost will rise even higher - reaching $5 trillion over a decade - if Senate Republicans can persuade Trump to make the bill's temporary business tax breaks permanent, according to the nonpartisan Committee for a Responsible Federal Budget. The CRFB projects that if Senate Republicans get their way, Trump's One Big Beautiful Bill Act could drive the federal debt to $46.9 trillion in 2029, the end of Trump's term. That is more than double the $20.2 trillion debt level of Trump's first year at the White House in 2017. Majorities of Americans of both parties -- 72% of Republicans and 86% of Democrats -- said they were concerned about the growing government debt in a Reuters/Ipsos poll last month. Analysts say voters worry less about debt than about retaining benefits such as Medicaid healthcare coverage for working Americans, who helped elect Trump and the Republican majorities in Congress. "Their concern is inflation," Hoagland said. "Their concern is affordability of healthcare." The two problems are linked: As investors worry about the nation's growing debt burden, they demand higher returns on government bonds, which likely means households will pay more for their home mortgages, auto loans and credit card balances. Republican denial of the deficit forecasts rests largely on two arguments about the 2017 Tax Cuts and Jobs Act that independent analysts say are misleading. One insists that CBO projections are not to be trusted because researchers predicted in 2018 that the TCJA would lose $1.8 trillion in revenue by 2024, while actual revenue for that year came in $1.5 trillion higher. "CBO scores, when we're dealing with taxes, have lost credibility," Republican Senator Markwayne Mullin told reporters last week. But independent analysts say the unexpected revenue gains resulted from a post-COVID inflation surge that pushed households into higher tax brackets and other factors unrelated to the tax legislation. Top Republicans also claim that extending the 2017 tax cuts and adding new breaks included in the House bill will stimulate economic growth, raising tax revenues and paying for the bill. Despite similar arguments in 2017, CBO estimates the Tax Cuts and Jobs Act increased the federal deficit by just under $1.9 trillion over a decade, even when including positive economic effects. Economists say the impact of the current bill will be more muted, because most of the tax provisions extend current tax rates rather lowering rates. "We find the package as it currently exists does boost the economy, but relatively modestly ... it does not pay for itself," said William McBride, chief economist at the nonpartisan Tax Foundation. The legislation has also raised concerns among budget experts about a potential debt spiral. Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics, said the danger of fiscal crisis has been heightened by a potential rise in global interest rates. "This greatly increases the cost of having a high debt and of running high deficits and would accelerate the point at which we really got into trouble," said Obstfeld, a former chief economist for the International Monetary Fund. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Axios
23 minutes ago
- Axios
Behind the Curtain: The scariest AI reality
The wildest, scariest, indisputable truth about AI's large language models is that the companies building them don't know exactly why or how they work. Sit with that for a moment. The most powerful companies, racing to build the most powerful superhuman intelligence capabilities — ones they readily admit occasionally go rogue to make things up, or even threaten their users — don't know why their machines do what they do. Why it matters: With the companies pouring hundreds of billions of dollars into willing superhuman intelligence into a quick existence, and Washington doing nothing to slow or police them, it seems worth dissecting this Great Unknown. None of the AI companies dispute this. They marvel at the mystery — and muse about it publicly. They're working feverishly to better understand it. They argue you don't need to fully understand a technology to tame or trust it. Two years ago, Axios managing editor for tech Scott Rosenberg wrote a story, "AI's scariest mystery," saying it's common knowledge among AI developers that they can't always explain or predict their systems' behavior. And that's more true than ever. Yet there's no sign that the government or companies or general public will demand any deeper understanding — or scrutiny — of building a technology with capabilities beyond human understanding. They're convinced the race to beat China to the most advanced LLMs warrants the risk of the Great Unknown. The House, despite knowing so little about AI, tucked language into President Trump's "Big, Beautiful Bill" that would prohibit states and localities from any AI regulations for 10 years. The Senate is considering limitations on the provision. Neither the AI companies nor Congress understands the power of AI a year from now, much less a decade from now. The big picture: Our purpose with this column isn't to be alarmist or " doomers." It's to clinically explain why the inner workings of superhuman intelligence models are a black box, even to the technology's creators. We'll also show, in their own words, how CEOs and founders of the largest AI companies all agree it's a black box. Let's start with a basic overview of how LLMs work, to better explain the Great Unknown: LLMs — including Open AI's ChatGPT, Anthropic's Claude and Google's Gemini — aren't traditional software systems following clear, human-written instructions, like Microsoft Word. In the case of Word, it does precisely what it's engineered to do. Instead, LLMs are massive neural networks — like a brain — that ingest massive amounts of information (much of the internet) to learn to generate answers. The engineers know what they're setting in motion, and what data sources they draw on. But the LLM's size — the sheer inhuman number of variables in each choice of "best next word" it makes — means even the experts can't explain exactly why it chooses to say anything in particular. We asked ChatGPT to explain this (and a human at OpenAI confirmed its accuracy): "We can observe what an LLM outputs, but the process by which it decides on a response is largely opaque. As OpenAI's researchers bluntly put it, 'we have not yet developed human-understandable explanations for why the model generates particular outputs.'" "In fact," ChatGPT continued, "OpenAI admitted that when they tweaked their model architecture in GPT-4, 'more research is needed' to understand why certain versions started hallucinating more than earlier versions — a surprising, unintended behavior even its creators couldn't fully diagnose." Anthropic — which just released Claude 4, the latest model of its LLM, with great fanfare — admitted it was unsure why Claude, when given access to fictional emails during safety testing, threatened to blackmail an engineer over a supposed extramarital affair. This was part of responsible safety testing — but Anthropic can't fully explain the irresponsible action. Again, sit with that: The company doesn't know why its machine went rogue and malicious. And, in truth, the creators don't really know how smart or independent the LLMs could grow. Anthropic even said Claude 4 is powerful enough to pose a greater risk of being used to develop nuclear or chemical weapons. OpenAI's Sam Altman and others toss around the tame word of " interpretability" to describe the challenge. "We certainly have not solved interpretability," Altman told a summit in Geneva last year. What Altman and others mean is they can't interpret the why: Why are LLMs doing what they're doing? Anthropic CEO Dario Amodei, in an essay in April called "The Urgency of Interpretability," warned: "People outside the field are often surprised and alarmed to learn that we do not understand how our own AI creations work. They are right to be concerned: this lack of understanding is essentially unprecedented in the history of technology." Amodei called this a serious risk to humanity — yet his company keeps boasting of more powerful models nearing superhuman capabilities. Anthropic has been studying the interpretability issue for years, and Amodei has been vocal about warning it's important to solve. In a statement for this story, Anthropic said: "Understanding how AI works is an urgent issue to solve. It's core to deploying safe AI models and unlocking [AI's] full potential in accelerating scientific discovery and technological development. We have a dedicated research team focused on solving this issue, and they've made significant strides in moving the industry's understanding of the inner workings of AI forward. It's crucial we understand how AI works before it radically transforms our global economy and everyday lives." (Read a paper Anthropic published last year, "Mapping the Mind of a Large Language Model.") Elon Musk has warned for years that AI presents a civilizational risk. In other words, he literally thinks it could destroy humanity, and has said as much. Yet Musk is pouring billions into his own LLM called Grok. "I think AI is a significant existential threat," Musk said in Riyadh, Saudi Arabia, last fall. There's a 10%-20% chance "that it goes bad." Reality check: Apple published a paper last week, "The Illusion of Thinking," concluding that even the most advanced AI reasoning models don't really "think," and can fail when stress-tested. The study found that state-of-the-art models (OpenAI's o3-min, DeepSeek R1 and Anthropic's Claude-3.7-Sonnet) still fail to develop generalizable problem-solving capabilities, with accuracy ultimately collapsing to zero "beyond certain complexities." But a new report by AI researchers, including former OpenAI employees, called " AI 2027," explains how the Great Unknown could, in theory, turn catastrophic in less than two years. The report is long and often too technical for casual readers to fully grasp. It's wholly speculative, though built on current data about how fast the models are improving. It's being widely read inside the AI companies. It captures the belief — or fear — that LLMs could one day think for themselves and start to act on their own. Our purpose isn't to alarm or sound doomy. Rather, you should know what the people building these models talk about incessantly. You can dismiss it as hype or hysteria. But researchers at all these companies worry LLMs, because we don't fully understand them, could outsmart their human creators and go rogue. In the AI 2027 report, the authors warn that competition with China will push LLMs potentially beyond human control, because no one will want to slow progress even if they see signs of acute danger. The safe-landing theory: Google's Sundar Pichai — and really all of the big AI company CEOs — argue that humans will learn to better understand how these machines work and find clever, if yet unknown ways, to control them and " improve lives." The companies all have big research and safety teams, and a huge incentive to tame the technologies if they want to ever realize their full value.
Axios
23 minutes ago
- Axios
Indianapolis homebuyers gain the upper hand
Homebuyers hold an edge in Indianapolis and across the nation — so long as you can cover the bigger tab. The big picture: There are nearly 500,000 more sellers than buyers in the U.S. housing market, Redfin estimates based on April figures. Why it matters: That's the widest gap on record — and a big reversal from just a few years ago, when buyers were desperate to find a place to live, sending prices into the stratosphere, Axios' Emily Peck and Sami Sparber report. By the numbers: There are 33.7% more sellers than buyers nationally. At no other point since Redfin began tracking in 2013 have sellers outnumbered buyers by such a large percentage. A year ago, sellers outnumbered buyers by 6.5%, and two years ago, buyers outnumbered sellers. Zoom in: The Indy metro had nearly 1,500 more sellers than buyers, a 21% difference, signaling a home buyer's market. Indianapolis also ranks fifth overall when tracking metros with the biggest year-over-year increases in pending home sales. Context: Redfin counted sellers as the number of active listings in a given area and created a model to estimate the total buyers. Where it stands: The one-two punch of still-soaring home prices and mortgage rates is making it hard for buyers, especially first-timers, to find a place they can afford despite the shift. Add to that the extreme economic uncertainty of 2025. Tariff news, layoff fears and, for many federal workers, layoff realities, are tamping down buyer demand. Yes, but: For home sellers "the mortgage rate lock-in effect is easing," per Redfin. "For most people, it's not realistic to stay put forever; job changes, return-to-office mandates and divorce force people to move." Elevated mortgage rates are becoming the norm. "The idea of taking on a higher mortgage rate also isn't as shocking as it was when rates first skyrocketed in 2022." Between the lines: Buying a home remains out of reach for most Americans, as the National Association of Realtors pointed out in a recent report. The median home price sold in the U.S. in the first three months of this year was $417,000, per federal data — 33% more than during the same period in 2019, before the housing market went haywire, outpacing inflation and incomes. Indy's median home sale price was $255,000 as of April per Redfin, a 4.9% increase when compared to the previous year. The household income required to afford a median home in the Indianapolis-Carmel-Anderson metro has also increased nearly 4% since last year. What to watch: Historically, when sellers outnumber buyers, prices drop. And in some markets, listings have already started falling. Redfin believes prices will dip 1% by the end of the year (not exactly a huge discount, to be sure). The bottom line: "The balance of power in the U.S. housing market has shifted toward buyers, but a lot of sellers have yet to see or accept the writing on the wall," said Redfin senior economist Asad Khan in the report.
