At Extreme Investor Network, we pride ourselves on providing cutting-edge insights into the economy and financial markets. Recently, JPMorgan increased the likelihood of a U.S. recession this year to 35%, up from the previous 25% estimate in their midyear outlook. Chief global economist Bruce Kasman highlighted concerns about the country’s financial health following market turbulence.
Despite these concerns, there have been positive developments in the labor market, with weekly jobless claims coming in lower than expected. Kasman noted a positive shift in the risk profile for U.S. inflation, attributing it to easing pressure on the labor market as demand cools. He also pointed out that wage inflation in the U.S. is slowing down in a unique way compared to other developed economies.
While the Fed held interest rates steady at its recent policy meeting, Fed funds futures are pricing in a 100% chance of a rate cut at the September gathering. This is in line with JPMorgan’s increased recession probability for this year, although Kasman emphasized that investors should not jump to conclusions about an impending recession.
Goldman Sachs also raised its recession forecast to 25% from 15%, but expressed confidence that a recession could be avoided with the Fed’s ability to decrease rates or buy bonds. Despite the heightened expectations for a recession, both JPMorgan and Goldman Sachs believe that the current economic environment is not displaying the typical vulnerabilities associated with a recession.
Stay tuned to Extreme Investor Network for more updates and expert analysis on the latest economic trends and market developments. Our team of experts is dedicated to providing unique insights and valuable information to help you navigate the ever-changing financial landscape.