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JPMorgan: High Probability Of U.S. Recession In The Next Two Years, Crypto is the Answer?

JPMorgan High Probability Of U.S. Recession In The Next Two Years

JPMorgan told Bloomberg that the U.S. economy has a greater than 50-50 chance of tipping into a recession in the next two years according to a model tracked by JPMorgan Chase & Co.

JPMorgan Chase in a banking giant worth $362 billion and is the world’s tenth largest financial services company by revenue. They now state that the U.S. economy has a greater 50-50 risk of tipping over into a recession in the next two years. The probability within one year is 28 percent and rises to over 60 percent in the next two years. Over the next three years, the probability is more than 80 percent according to the researchers.

JPMorgan’s model includes indicators ranging from consumer and business sentiment to prime-age male labour participation, compensation growth, and durables and structures as a share of the gross domestic product. The bank’s gauge is more pessimistic than a recession tracker maintained by the Federal Reserve Bank of New York, which shows a 14.5 percent chance of a recession by the end of 2019, which is more conservative than JPMorgan’s prediction.

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A reason that they present different numbers is that they use different metrics. JPMorgan tracks virtually every indicator that could contribute to the global economy while the Federal Bank Reserve’s metrics are not as comprehensive.

Steven Stanley is the chief economist at Amherst Pierpoint, stated in the interview that 2020 could be considered as a premature period for the next U.S. recession to occur. However, he shared a similar sentiment with JPMorgan that there is a risk for a recession in the years to come but, argued that the US economy remains strong with the long unemployment rate and a still ongoing bull market.

Even though a recession might be a few years away, there has been talking around the subject and investors are cautious. At the same time as news has circulated about a market crash, the demand for cryptocurrencies has increased rapidly. A few months ago when the Turkish lira crashed, the demand for bitcoin increased in the country. The local exchanges saw volume rises of more than 100 percent which could prove that people turn to cryptocurrencies in times of uncertainty.

Many financial institutions such as Goldman Sachs, Intercontinental exchange, JPMorgan and CBOE are all getting into cryptocurrencies and offer the digital assets to its clients. We might get closer to a financial recession, and the institutions are getting into the new asset class.

Image Source: “Flickr”

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