SUMMARY OF JPMORGAN’S REVISED OUTLOOK (APRIL 2025): 🔸 GDP Growth: JPMorgan Chase now expects U.S. real GDP to shrink by -0.3% for the year, down sharply from the previous +1.3% projection. 🔸 Unemployment: Forecasted to rise to 5.3% due to weaker economic activity. 🔸 Inflation: Core PCE inflation revised up to 4.4%, an increase of 1.4 percentage points, driven mainly by new tariffs. Federal Reserve Policy: 🔸 Easing expected to start in June. 🔸 Rate cuts anticipated at every meeting through January, potentially bringing the top of the federal funds rate down to 3.0%. 🔸 Risk lies more in delayed easing rather than earlier action. Tariffs' Effects: 🔸 Higher inflation will erode real income and consumer spending. 🔸 Export volumes are expected to suffer due to retaliatory tariffs, especially from China. Consumer Behavior: 🔸 Households may be reluctant to dip into savings to maintain spending levels amid growing uncertainty. Timing of Weakness: 🔸 The third and fourth quarters of the year will likely see the worst economic performance, partly due to a reversal of Q1 dynamics (imports/inventories). Stagflation Risk: 🔸 Feroli sees this as a stagflationary environment: high inflation + slowing growth + rising unemployment. 🔸 However, he believes weakness in the labor market could ultimately calm the Fed’s inflation fears, particularly if wage growth softens.