JPMorgan has foreseen a potential US recession around 2025 because the basis of this expectation is aggressive tariff increases taken by President Trump. The newly announced reciprocal tariffs have been directed toward equal trade balance and are certain to raise inflation and unemployment levels in the next few years.
Economic Predictions for US Recession and Tariffs
The US economy in 2025 will shrink with these tariffs exerting extra pressure, according to JPMorgan chief US economist Michael Feroli. The unemployment rate can also go up to 5.3%, a sharp rise compared to the current figures. The Federal Reserve also warned of the effect of these tariffs. Fed Chairman Jerome Powell said that raising tariffs would likely result in increased inflation and weaker growth.
Recent projections indicate that inflation can hit 4.4% at the end of the year, a steep increase from 2.8% in February. JPMorgan analysts predict Federal Reserve interest rate cuts beginning in June to address inflation to reduce rates as low as between 2.75% and 3% by January 2026.
Global Market Reactions
The world economy bears the brunt of America’s rising trade war. Since the imposition of these tariffs, China has levied a 34% tariff on US products, increasing market volatility. The trade war has already cut more than $5 trillion from the US stock market.
Not just JPMorgan, but banks such as Barclays and Citi have expressed their concerns. Barclays is expecting a decline next year, and Citi is expecting low growth of just 0.1%.
The Crypto Market Impact
The cryptocurrency market has also responded aggressively to the news. Following the tariff statements, the price of Bitcoin briefly rose to $88,500 before falling below essential support levels. Altcoins such as XRP, Solana, and Dogecoin have also fallen by as much as 4.5%.
There is a broad fear, uncertainty, and doubt (FUD) across the crypto market. Bitcoin values decreased by 10% since February last, while Ethereum shed 20%. Conversely, however, XRP is up 5% with the SEC announcing the dropping of the case against Ripple, alleviating some investor apprehensions.
Bitcoin as Digital Gold
Market analysts are divided on the prospects for Bitcoin during this uncertain time. Some regard Bitcoin as “digital gold,” a hedge against increasing economic uncertainty. If rate cuts by the Federal Reserve inject more liquidity into the system, Bitcoin might benefit handsomely. Poor economic performance, though, could bring Bitcoin prices lower.
Key Indicators for Investors
Investors are watching closely two important things: the equities market and global liquidity. If equities keep falling, Bitcoin will also follow suit. But if equities stabilize, the price of Bitcoin may recover.
Liquidity indicators like the Federal Reserve’s balance sheet and money velocity M2 will also dictate the market’s direction. The Fed is already undergoing Quantitative Tightening (QT), which makes it harder for riskier assets like Bitcoin to increase. The increase in liquidity can result in a rally in the cryptocurrency market.
Expert Views on Future Dangers
Michael Saylor has stated that such tariffs are merely the tip of the iceberg for possible economic danger. He points out that inflation is only one part, as investors are also threatened by taxation and regulation. Saylor promotes the utilization of Bitcoin as a hard asset in the face of other concealed dangers.
Robert Kiyosaki, author of Rich Dad Poor Dad, cautioned that there is an impending financial crisis. In his opinion, Baby Boomers should shift investments from traditional sources to hard assets such as gold and Bitcoin which are regarded as secure in periods of economic crises.
