Fears of a U.S. recession by the end of 2025 have intensified due to economic uncertainties and policy shifts, according to multiple economic experts.
J.P. Morgan economists estimate a 40% chance of a U.S. and global recession, driven by trade tensions and sluggish growth projections of 0.25% annualized GDP in the second half of 2025. Goldman Sachs, however, predicts a lower 15% recession probability, citing a strong labor market and consumer spending as stabilizing factors. Former Treasury Secretary Larry Summers has warned of a near 50% recession risk, citing counterproductive economic policies like tariffs.
Some economists, like those at UCLA Anderson Forecast, claim a recession is avoidable if policies such as tariffs and mass deportations are scaled back or phased in gradually. They emphasize that abrupt tariff implementations and labor market disruptions from deportations could raise production costs and inflation, potentially triggering stagflation. Persistent inflation above the Federal Reserve’s 2% target, currently at 2.7% core PCE, is another concern that could force tighter monetary policy and slow growth.
Uncertainty from ad-hoc tariff policies and federal job cuts by the Department of Government Efficiency (DOGE) is dampening business and consumer confidence, which may lead to reduced investment and spending. A trade war escalation, particularly with China, could guarantee a recession by increasing costs and disrupting supply chains, as seen in recent market volatility. Simultaneous contractions in sectors like manufacturing, construction, and government spending could tip the economy into a downturn.
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