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| JP Morgan Chase believes the US will avoid recession. People shop at a supermarket in California, US. (Source: AFP) |
Previously, JP Morgan Chase & Co predicted that a recession would occur in the US in 2023. However, the organization now believes that the world's largest economy will continue to grow slightly in 2023.
“The odds of a healthy economic expansion without inflation are rising, thanks to productivity gains from artificial intelligence (AI) and a more abundant labor supply,” said Michale Feroli, chief economist at JP Morgan Chase & Co. “The possibility of a recession has disappeared in recent months.”
The relatively quick resolution of the debt ceiling and the regulatory guarantees to bank depositors have significantly reduced the likelihood of financial risks, Feroli pointed out.
However, although a recession is no longer the main concern, it could still become a reality if the US Federal Reserve (Fed) does not stop its interest rate hike path.
“Any increase in inflation could prompt the Federal Open Market Committee (FOMC) to undertake another round or more rate hikes,” Mr. Feroli warned.
The US will release July consumer price data - the Fed's inflation gauge - on August 10.
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