- JPMorgan is the latest bank on Wall Street to push out its recession forecast to 2024.
- The call comes just a few days after Bank of America suggested that a recession may not happen until next year, if it does at all.
- "Waning post-pandemic disruptions and waxing supply-side developments suggest upside risk," JPMorgan said.
Don't hold your breath for an economic recession to his the US anytime soon, according to a Friday note from JPMorgan.
The bank became the latest Wall Street bank to delay its recession forecast to 2024, if it happens at all. Bank of America became the first Wall Street bank earlier last week to delay its 2023 recession forecast.
According to JPMorgan, economic growth still looks "solid" for the third quarter of the year, and while recession risks are elevated for next year, there could still be a period of "modest, sub-par" economic growth.
And slowing growth doesn't translate into a recession.
"The early adding-up of third-quarter data suggests the economy is expanding at a healthy pace, and we are revising up our current-quarter tracking of real annualized GDP growth from 0.5% to 2.5%," JPMorgan's Michael Feroli said. "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."
It turns out a rock solid jobs market is enough to fuel consumer spending, which makes up the bulk of the US economy. Friday's job report showed nearly 200,000 jobs were added to the economy last month, bringing the year-to-date job gains to about 2 million.
And while early signs of credit deterioration are materializing, there is still too much momentum in the economy for a recession to hit in the near-term.
The most recent GDPNow estimate from the Federal Reserve Bank of Atlanta suggests annualized GDP growth of 3.9% in the third-quarter.
"Waning post-pandemic disruptions and waxing supply-side developments suggests upside risks" to the economy, Feroli said.
But there are downside risks to the economy as well, especially if inflation doesn't continue to ease, but rather rebounds. That would put more pressure on the Fed to continue hiking interest rates, or at the very least delay future interest rate cuts. And the recent surge in gas prices isn't helping the inflation equation.
"If inflation doesn't continue to ease, more Fed hikes and rising odds of a downturn will come back... Absent further slowing in wage growth, the Fed may feel compelled to resume hiking, which would dash soft landing hopes," Feroli said.