When President Donald Trump announced his sweeping tariff plans a couple of months ago, economists at J.P. Morgan put the probability of a U.S. recession at 60% because of the prospect of a global trade war and skyrocketing prices.
Since then, Trump has backed off or delayed many of those plans, and J.P. Morgan has lowered its recession odds to a “toss-up” and now suggests a recession might not happen at all. But the investment bank still expects the economy to face some rough patches — meaning Americans should probably still prepare for the possibility of recession.
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“The recent backtrack on U.S.-China tariffs has altered our thinking in two important ways,” Joseph Lupton, a global economist at J.P. Morgan, noted in a May 27 report . “First, the size of the tariff tax hike has been scaled down, imparting less of a purchasing power squeeze. Second, the quick unilateral tariff reversal by President Trump is signaling less tolerance for ‘ short-term pain, long-term gain .'”
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‘No Longer See a Recession’
As a result, Lupton added, “We no longer see a U.S. recession, but expect material headwinds to keep growth weak through the rest of this year.”
Other brokerages have offered similar views in recent weeks. As Reuters reported on May 13, Goldman Sachs lowered its U.S. recession forecast to 35% from 45%, while Barclays “dismissed recession risks entirely.”
But others still see a challenging environment simply because Trump keeps shifting his tariff plans.
“[We’ve] never had a situation where you have no idea where the average tariff rate is going to be a few months from now,” Pulitzer Prize-winning economist Paul Krugman said in an April interview on Bloomberg Talks . “This creates an impossible environment for business.”
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Should You Still Prepare For a Recession?
Although experts have lowered the odds of a recession — at least this year — there’s nothing wrong with preparing for one anyway. Trump seems determined to keep pursuing tariffs, and many of those tariffs are likely to lead to higher prices and economic uncertainty, experts say.
If you’re worried about a recession, here are a few ways to prepare:
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This article originally appeared on GOBankingRates.com : J.P. Morgan Says the Probability of a Recession Has Fallen: Should You Prepare for One Anyway?