In a significant departure from their earlier forecasts, JPMorgan’s team of economists has abandoned predictions of an imminent U.S. recession. Leading the way is the bank’s Chief U.S. Economist, Michael Feroli, who exudes confidence that the American economy will chart a path of modest yet consistent growth for the remainder of this year and well into 2024. Following in the footsteps of Bank of America, JPMorgan’s economists have discarded their earlier projections of an impending recession.
JPMorgan economists reverse previous gloom prediction
The bank, previously anticipating a downturn in 2023, now embraces a more optimistic viewpoint, suggesting that a full-blown recession can be evaded. Although Feroli acknowledged that the risk of a downturn remains elevated, he emphasized that their primary scenario no longer includes a recession. He pointed out two potential paths for such risks to manifest – one being if the Federal Reserve continues raising interest rates, and the other involving the delayed effects of previous tightening measures.
Feroli, alongside his team at JPMorgan, envisions a resurgence in the U.S. economy for 2023, followed by a period of “modest, sub-par growth” in the subsequent year. This contradicts the prevailing notion that a recession or even a depression is on the horizon for the United States. While dissenting opinions, like that of Danielle DiMartino Booth, CEO and Chief Strategist at QI Research, highlight the yet-to-be-realized consequences of Federal Reserve policies, JPMorgan remains steadfast in its newly optimistic stance.
Interestingly, JP Morgan’s perspective emerges amidst Fitch Ratings’ decision to downgrade the United States’ credit rating. However, JPMorgan’s Chief Executive, Jamie Dimon, dismissed the downgrade as “ridiculous.” In an interview with CNBC, Dimon brushed off the significance of the rating shift, highlighting the country’s unmatched prosperity and security on a global scale. Dimon and his JPMorgan team foresee the U.S. economy displaying signs of growth, prompting them to reassess their earlier predictions.
The firm’s economists believe that the momentum generated by this growth will likely prevent the economy from slipping into a mild contraction as previously projected. This shift in perspective carries implications for both domestic and international economic narratives. As JPMorgan’s economists steer away from a pessimistic outlook, they join a growing chorus of voices advocating for a more positive trajectory. While risks remain, the belief in sustained growth challenges the prevailing discourse of imminent recession.
It is worth noting that this reversal isn’t devoid of skepticism. The cautionary notes about potential risks, coupled with the evolving landscape of global economics, underscore the complex dynamics at play. As the U.S. economy continues its journey through the remainder of 2023 and beyond, the debate surrounding its trajectory is likely to intensify. JPMorgan’s economists have made a substantial U-turn on their recession predictions, painting a more optimistic picture of the U.S. economic landscape.
Led by Chief U.S. Economist Michael Feroli, the bank now anticipates steady growth in the coming years, effectively challenging earlier projections of a downturn. This shift in perspective adds a new dimension to ongoing discussions about the future of the U.S. economy, highlighting the nuanced nature of economic forecasting and the ever-evolving interplay of global financial forces.