JPMorgan’s Kasman Sees No Recession as Dimon’s ‘Hurricane’ Ebbs
2022.06.07 00:01
© Bloomberg. Bruce Kasman Photographer: Christopher Goodney/Bloomberg
(Bloomberg) — JPMorgan Chase & Co. (NYSE:JPM) Chief Economist Bruce Kasman says there’s little chance a US recession is imminent — and for the moment, investors agree with him more than his boss.
“There’s no real reason to be worried about a recession,” Kasman told Bloomberg Television’s Surveillance on Monday. “There is some slowing in the picture.”
JPMorgan Chief Executive Officer Jamie Dimon on Wednesday said investors should be ready for an economic “hurricane” as tighter monetary policy, inflation and Russia’s invasion of Ukraine pose ongoing risks.
“That hurricane is right out there down the road coming our way,” Dimon said at a conference. He also noted the strength of the consumer, rising wages and plentiful jobs as “bright clouds.”
Shares of JPMorgan dropped 1.8% that day amid a decline in the broader market, with Dimon’s remarks cited as one of the reasons. Since then, there’s been something of a rebound and stock prices are up on Monday.
Read: Corporate America Turns Up Volume on Warnings About Economy
“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,” Kasman said. “We don’t see a near-term recession. We see a global economy which actually does OK in the second half of the year, with the US slowing and the rest of the world doing somewhat better.”
JPMorgan economists last month lowered their growth outlook for the second half of 2022 to a 2.4% rate from 3%, for the first half of 2023 to 1.5% from 2.1% and for the second half of 2023 to 1% from 1.4%. They cited falling stock prices, higher mortgage rates and a stronger dollar relative to trading partners.
Fed Watch
Kasman said the Federal Reserve’s rate-rise regime and balance sheet reduction is a key determinant.
“There’s a good chance they slow the pace down. But ultimately I don’t think what you see in market pricing is going to be consistent with the Fed getting control on inflation,” he said. “The Fed is going to have to do more. But I don’t think the Fed is ready or signaling that it’s willing to do that much more in the near term. The Fed does not want to create a recession right now.”
The JPMorgan economist said his CEO has “his own views,” and notes that the firm’s leadership is in a position “much more clear-cut about understanding dynamics in financial conditions and how they were going to impact on the macro economy.”
Still, “we give our advice as we see it,” Kasman said. “We see the economy slowing. We don’t see a financial storm coming right now. We think the economy is going to avoid recession as we go through the rest of this year.”
Read: JPMorgan’s Kolanovic Sees Sunny Stocks as Dimon Braces for Storm
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