JPMorgan says US economy has better than 50/50 chance of recession in next two years

JPMorgan says US economy has better than 50/50 chance of recession in next two years

The U.S. economy could face serious problems in the next two years, according to a model tracked by JPMorgan Chase & Co.

The odds of a recession happening within one year is almost 28 percent, Bloomberg first reported Thursday. 

The probability of a U.S. recession reportedly rises over the next two years by more than 60 percent and reaches higher than 80 percent over the next three years. 

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JPMorgan’s model takes a variety of indicators into account, from “consumer and business sentiment to prime-age male labor participation, compensation growth, and durables and structures as a share of gross domestic product,” the publication noted.

The recession tracker is more pessimistic than the one the Federal Reserve Bank of New York maintains, which shows the odds of the economy suffering a recession within one year at almost 14.5 percent.

The report comes months after former Federal Reserve Chairman Ben Bernanke warned the recent $1.5 trillion tax cut and $300 billion increase in federal spending could spell danger for the economy by making the central banking system’s job more difficult.

“What you are getting is a stimulus at the very wrong moment,” Bernanke said at the American Enterprise Institute in June. “The economy is already at full employment.”

Bernanke added that the federal government's spending “is going to hit the economy in a big way this year and next year, and then in 2020, Wile E. Coyote is going to go off the cliff."