U.S. Economy Continues Growth with Recession Risks Pending

Overview

According to J.P. Morgan's June 2026 report, despite high policy uncertainty, a rising risk of recession, and weak consumer confidence, the U.S. economy is continuing to grow. The report forecasts higher S&P 500 earnings in 2026, inflation regressing to 2% slowly, and the first Fed rate hike in September 2027.

Core views

The U.S. economy maintains growth even in high policy uncertainty thanks to strong productivity (the best since the internet era) and robust corporate earnings. Actual GDP grew 3% in 2024 and is forecasted at 0% in 2025, with tech capital expenditures contributing growth (0% of GDP in 2024; 2% in 2025). Corporate earnings remain strong with S&P 500 earnings expectations rising in 2026. Inflation trends slowly back to 2% while core PCE inflation remains above target. Labor market data show slight improvement, with unemployment at a peak and wage growth expected to moderate. Global capital expenditures are surging due to AI-driven demand, with global semiconductor sales forecast to rise 74% in 2026. However, AI is not the only driver of growth and adoption is still in early stages. The largest downside risk is a disruption in oil supply under conditions of海峡 reopening. No major new federal legislation or fiscal stance is expected before 2028; tariffs are forecast to return to IEA/EU levels in autumn.

Analysis framework

The report employs a multi-dimensional integrated analytical framework assessing U.S. economic outlook through GDP, employment, inflation, corporate earnings, policy environment, technological drivers (AI), and risk factors (oil supply). It synthesizes historical data, market expectations, and professional surveys (e.g., forecasts from economists) to evaluate economic prospects, emphasizing trends and future trajectories of key indicators.

Key data

• 2024 Actual GDP Growth3%2025 forecast: 0%
• 2026 S&P 500 Earnings ExpectationUpRobust corporate profitability
• Core PCE InflationAbove 2%Slowing back to 2%
• Global Semiconductor Sales Growth in 202674%2023: -1%; 2024: 62%; 2025: 72%
• First Fed Rate Hike PredictionSeptember 2027Based on market interest rate expectations

Impact & implications

Sustained economic growth is likely to support corporate earnings and equity performance. Monitor inflation trends and the Fed's policy path, as well as oil supply conditions. A relatively stable policy environment with limited major fiscal changes before 2028, and tariffs returning to normal levels in autumn, present opportunities in technology-related capital expenditures.

Risks

• High policy uncertainty
• Rising risk of recession
• Slow regression of inflation to 2%
• Oil supply disruption (closure of海峡)

What to watch

• Federal Reserve policy path
• Evolution of inflation data
• Oil supply conditions
• Policy environment ahead of the 2028 election