Bank pessimism about economy grows

A slew of large U.S. banks are slashing their expectations for the economy, as continued turmoil and concern grips financial markets.

JPMorgan Chase & Co. stated Friday it now expects the United State's economy to grow by just 1.0 percent for the fourth quarter of 2011, down from its previous expectations of 2.5 percent growth.

And it was clear no immediate optimism was on hand for the beginning of 2012, as the bank lowered its estimates for the first quarter of that year to 0.5 percent from 1.5 percent.

"The risks of a recession are clearly elevated,” the firm wrote.

Similarly, Citigroup lowered expectations for 2011's economic growth to 1.6 percent from 1.7 percent, and now expects the economy to grow 2.1 percent in 2012, as opposed to the previous estimate of 2.7 percent.

The two firms now join a growing club of pessimists about the economy. On Thursday, both Morgan Stanley and Goldman Sachs tempered their expectations for the economy. Morgan Stanley said in a new report that the global economy is "hovering dangerously close to a recession." It now expects the world's economy to grow 3.9 percent in 2011 and 3.8 percent in 2012, compared to previous estimates of 4.2 percent and 4.5 percent, respectively.

And Goldman Sachs expects the globe to grow by 4.0 percent in 2011, compared to a previous 4.1 percent estimate, and 4.4 percent in 2012, down from 4.6 percent. In 2012, Goldman now expects the U.S. economy to grow 2.1 percent, down from a 3.0 percent estimate earlier in the year.

The stock market has been relentlessly volatile in the month of August. The Dow Jones Industrial Average was down roughly 400 points on Thursday, and the blue-chip index has swung back and forth between positive and negative territory on Friday.

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