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And More June 7, 2022 2 mins read

JPMorgan’s Chief Economist Says That No Recession is On The Horizon

And More ı By Rochdi Rais

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jpmorgan

JPMorgan’s chief economist said that there's no reason to be worried about a US recession, thanks to a private sector that's in "remarkable" shape.

With inflation surging, the Federal Reserve raising interest rates, and Russia's invasion of Ukraine, many analysts have become anxious that US growth could go into reverse.

However, Bruce Kasman, JPMorgan's chief economist, told Bloomberg TV Monday that although the economy is likely to slow, the risks of a recession over the next 12 months are low.

"There's no real reason to be worried about a recession," he said. "I think you'd have to get hit by much bigger shocks to really talk about a recession anytime in the next 12 months or so."

Kasman added that inflation — which is running at 40-year highs in the US — and a rise in interest rates posed problems for the economy. Still, Americans have enough savings to keep spending even during the era of higher prices, he said.

"I think what we have here is a pretty powerful tension between drags that are not going away and a very resilient private sector, with the health of both households and corporates being quite remarkable right now," he told Bloomberg.

Ironically, JPMorgan CEO Jamie Dimon, said there is a "hurricane" bearing down on the US economy one week ago. Dimon cited the Fed's jump in oil prices due to the war in Ukraine and Fed's interest raise.

Still, Kasman said the real storm isn’t on the horizon. The economist argued that the Fed does not want to strike growth in the near term but may have to raise rates more sharply later on to curb inflation.

Investors expect the Fed to raise interest rates to above 3% by the middle of 2023, according to the CME FedWatch tool, from a range of 0.75% to 1% currently. But Kasman said more might be needed at some point.

"The Fed does not want to create a recession right now," he said. "The Fed is tolerant of inflation above 2%. So this is gonna take time before we get to the point where the Fed really has to hurt us."

In the meantime, Kasman said, "the US household sector has every ability to continue to absorb drags from higher inflation."

 

 

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Rochdi Rais

Rochdi Rais is the Head of Growth and financial and legal writer at USA Herald. He has been writing and editing financial, legal and U.S. news for years with over +4000 articles published during his career.

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