|
The
firm increased its current-quarter real annualized GDP growth
estimate to 2.5% from 0.5%, Michael Feroli wrote in a research
note on Friday.
"Given this growth, we doubt the economy will quickly lose
enough momentum to slip into a mild contraction as early as next
quarter, as we had previously projected," the economist wrote.
And while recession risks are still elevated for next year,
Feroli said he expects modest, sub-par growth.
Earlier this week, strategists at Bank of America said they no
longer forecast a 2024 recession for the U.S. and increased
their 2023 economic growth outlook for the country.
JPMorgan's Feroli pointed to items such as the relatively quick
resolution of the debt ceiling and regulators’ implicit
guarantee of bank depositors during the regional banking crisis
earlier this year.
Feroli said this "vastly reduced the odds of a different type of
financial crisis risk, although leaving in place the chronic
headwind of tighter bank credit."
The economist also cited a pickup in labor supply and hints of
improving supply-side performance in second-quarter productivity
data, while equity markets are looking for "further productivity
gains from greater use of artificial intelligence."
Still, while a recession is no longer his base case, it could
materialize if the Fed is not done hiking rates, Feroli
cautioned.
And he said it "probably wouldn’t take much of an upside
inflation surprise for the FOMC to deliver the extra rate hike
that was signaled in the June dots, with perhaps even more to
come."
The U.S. will report July consumer price data on August 10.
(Reporting By Sinéad Carew, editing by Deepa Babington)
[© 2023 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
