MARKETS-STOCKS/

JPMorgan Chase Cuts GDP View, Warns of "Elevated" Risk of Recession

Politics FOXBusiness

In a fresh sign of the scary economic picture, JPMorgan Chase (JPM) economists on Friday joined a chorus of analysts taking an axe to their growth forecasts.

Continue Reading Below

According to Dow Jones Newswires, JPMorgan sees fourth-quarter gross domestic product growth of just 1%, way off from 2.5% previously. In the first quarter of 2012, JPMorgan projects GDP inching up just 0.5%, compared with 1.5%.

The risks of a recession are clearly elevated, the economists wrote in a note, the wire service reported.

The downgrade comes after a particularly bearish day that saw the Dow Jones Industrial Average plummet 420 points, a closely-watched mid-Atlantic manufacturing indicator plunge into negative territory and Goldman Sachs (GS) and Morgan Stanley (MS) cut their growth forecasts.

While most economists still believe the U.S. will avoid a painful double-dip recession, the odds have clearly increased. Technically, a recession is defined as two consecutive quarters of contraction.

Some economists are now worrying that incredibly bearish sentiment -- consumer sentiment tumbled this month to territory unseen in 31 years -- will turn the situation into a self-fulfilling prophesy.

Continue Reading Below

Declining energy prices should help to cushion some of the weakness in the economy, and the still-low levels of cyclically-sensitive spending could reduce the chances of getting a negative GDP quarter," JPMorgan wrote.

Slammed by economic pessimism and growing concern about Europes sovereign debt emergency, the Dow declined another 100 points at Fridays open.

What do you think?

Click the button below to comment on this article.