The temporary suspension of tariffs—cutting U.S. duties on Chinese imports to 30% and reducing China’s tariffs on American goods to 10%—has slashed the probability of a 2025 U.S. recession from over 70% to just 40%, according to data from the Kalshi prediction market.
According to JPMorgan’s Chief US Economist Michael Feroli, the government’s recent move to ease some of the tougher tariffs on China has helped lower the chances of a recession.
The bank no longer expects the world’s largest economy to fall into a recession in 2025, while also projecting a higher 4.8% pace of growth for China.
According to Feroli, the government’s recent move to ease some of the tougher tariffs on China has helped lower the chances of a recession. While the risk of an economic slowdown is still present, it is now considered to be less than 50%.
The US economy is now expected to grow by 0.6% in 2025, up from the earlier prediction of 0.2%. The bank also revised its inflation forecast, expecting a key measure of inflation, based on personal consumption expenditures (excluding food and energy), to rise by 3.5% instead of 4%.
Meanwhile, Goldman Sachs and other major banks have raised their growth forecasts for China’s economy, thanks to a temporary agreement with the US to reduce trade tensions. ING raised its forecast to 4.7%, with the possibility of a further increase if a deal is reached soon.
Goldman Sachs now predicts China’s economy will grow by 4.6% in 2025, up from the previous estimate of 4%.
