From Financial Modeling Prep: 2024-11-25 03:00:26

JPMorgan predicts two potential U.S. economic scenarios for 2025: a soft landing or a recessionary downturn. In the soft landing scenario, growth stabilizes, while in the recessionary downturn scenario, inflation persists, leading to higher rates and reduced consumer spending. The outcome will depend on the Fed’s ability to manage inflation without triggering a recession.

Implications of the soft landing scenario include strong performance in equities, particularly in interest rate-sensitive sectors, and stabilized bond yields. In contrast, the recessionary downturn scenario could see defensive sectors outperforming, a prolonged downturn in risk assets, and increased interest in safe-haven assets like gold.

Key drivers for both scenarios include the Fed’s inflation management and the impact of fiscal policies on consumer finances. Investors are advised to diversify and focus on quality assets to navigate potential volatility in 2025, regardless of whether the economy stabilizes or enters a downturn.



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