August 4, 2023
JPMorgan Chase & Co. economists scrapped their call for a recession in the US, joining a growing number of forecasters who now expect the economy to avert the downturn that was once viewed as inevitable.
The bank, which had previously said it expected a recession to begin in 2023, now sees continued expansion this year and “modest, sub-par growth” in 2024 as the most likely scenario. Michael Feroli, chief US economist at the bank, flagged the rising possibility of “healthy non-inflationary growth” thanks to potential productivity gains from artificial intelligence and a pickup in labor supply.
Earlier this week Bank of America Corp. became the first large Wall Street bank to officially reverse its call amid growing optimism about the economic outlook. Both of the updated outlooks come on the heels of a similar change in tune among the Federal Reserve’s own economists.
“While a recession is no longer our modal scenario, risk of a downturn is still very elevated,” Feroli wrote in a note to clients on Friday. “One way this risk could materialize is if the Fed is not done hiking rates.”