Leading investment bank JPMorgan Chase & Co. says the worst of the market correction is over. The analysis is based on a drop in the chances of recession.

According to Bloomberg, analysts at the bank commented, “Credit markets, which were proven right on multiple occasions over the past two years, ‘are once again more dismissive of US recession risks than equity or rate markets.’” This contrasts the view of other analysts at the bank who said the risk of a recession has risen to 40%. Moody’s Analytics has put the risk at 35%, commenting that tariffs would slow the U.S. economy.

Which forecast is right depends on an analyst’s view of tariffs. The Trump administration has imposed a 25% tariff on steel and aluminum imports. The president said he would raise those tariff levels if Canada and the EU decided to retaliate. He commented, “Whatever they charge us, we’re charging them.”

There remains a chance of a major global trade war, which would likely start with massive tariffs on imports from Canada, China, and Mexico. Mexico has 14.5% of the U.S. trading partner market share, Canada has 13.5%, and China has 10.7%. Yale’s Budget Lab reports that tariffs would be a major drag on gross domestic product.

Another argument that the market correction is not over is that it has risen so fast over a short period. The S&P 500 was up over 20% in both 2023 and 2024. Since 1980, the market has dropped by 10% every 1.2 years.

J.P. Morgan’s forecast may be right, but a large body of opinions say it is wrong.

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