JPMorgan raises US growth estimate, no longer expects 2023 recession.

JPMorgan raises US growth estimate, no longer expects 2023 recession.

JPMorgan Chief Economist Raises Economic Growth Estimate, Says No Recession in Sight


In a surprising turn of events, JPMorgan’s chief economist, Michael Feroli, announced on Friday that the bank is no longer predicting a U.S. recession this year, and has even raised its economic growth estimate. This positive update came as a relief to many, as fears of an economic downturn have been looming over the market for quite some time.

According to Feroli, “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.” JPMorgan has increased its current-quarter real annualized GDP growth estimate from 0.5% to a staggering 2.5%, reflecting the bank’s confidence in the economy’s ability to expand at a healthy pace.

This change in forecast aligns with recent statements from strategists at Bank of America, who also adjusted their projections to exclude a 2024 recession for the U.S. and raised their 2023 economic growth outlook. It appears that multiple institutions are now experiencing a wave of optimism for the country’s economic future.

These positive revisions are not without reason. Feroli highlighted several contributing factors that led to this change in outlook. Firstly, the relatively quick resolution of the debt ceiling and regulators’ implicit guarantee of bank depositors during the regional banking crisis earlier this year have significantly reduced the odds of a financial crisis. While the chronic headwind of tighter bank credit remains, the risk of a different type of financial crisis has greatly diminished.

Furthermore, the increase in labor supply and the hints of improving supply-side performance in second-quarter productivity data have played a role in boosting economic sentiment. Additionally, equity markets are eagerly anticipating further productivity gains from the greater usage of artificial intelligence.

However, Feroli did issue a cautious warning that while a recession is no longer his base case, it could still materialize if the Federal Reserve continues hiking interest rates. He also emphasized that 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 its July consumer price data on August 10, which could provide further insights into the inflation situation.

Overall, this unexpected shift in the economic outlook brings a renewed sense of hope and positivity. The latest projections from JPMorgan and Bank of America indicate that the U.S. economy is on a path of sustained growth, with recession risks being mitigated and potential opportunities for further expansion. While challenges still remain, such as the potential impact of interest rate hikes, the current forecast paints a brighter picture for the future. Let us hope that these positive trends continue and pave the way for a prosperous economy ahead.