![]() ![]() That raises some interesting tensions, as does the regional story, where we had expected the US to underperform in a significant way. So while overall performance has been somewhat stronger than we expected, the sectoral imbalance between services and manufacturing has been sustained. Services which we had expected strength, but had been looking for it to somewhat fade by this point, has not. The manufacturing sector, which we had hoped would be in recovery phase by the middle of the year still looks weak. I think we're at an interesting juncture because we see different sectoral and regional performance than we had hoped for. If anything, growth and inflation, which we thought would be resilient at both surprise to the upside, central banks which we had thought would start to downshift and possibly pause do look like they're validating that. So, we really haven't changed our views in any meaningful way. Has anything changed in your view since the first half of the year?īRUCE KASMAN: So, one of the odd parts of this year is that basically, our key outlook themes have actually held up. And our bias continues to be on recessions later, on rate paths for central banks higher, and ultimately more synchronized recession dynamics, and therefore, deeper in terms of the ultimate outcome once the expansion comes to an end. But I would emphasize the broad window that that's possible in terms of what that timing is. We have a baseline forecast for the US of recession ending at the end of this year. But we don't feel particularly confident in forecasting the specific timing. We certainly think the expansion is likely to end early, both in the US and globally. And how that plays out and what it means for the life of the expansion is somewhat difficult to forecast. The final point is that in a world in which you do not have sustainably lower inflation and you have resiliency, there is a tension here. But no, we do not think you're going to get inflation back below 3% in the US or the euro area this year in an environment in which supply has been damaged in a more lasting way and inflation psychology has shifted. That view is based on the idea that while respecting the tightening in monetary policy, there are other supports that are quite powerful that are providing a significant offset, including the fading of last year's negative shocks, the resiliency of a very healthy private sector, and including central banks that we think are tightening, but still want to preserve expansions. The second point is that we do not think inflation is going to come back to central bank comfort zones by themselves. The first one is that neither the US nor the global economy is fragile or likely to fall into recession any time, at least through the third quarter of the year. What’s your take?īRUCE KASMAN: So, our outlook for 2023 has really been based on three principles. HOST: Bruce, there’s been a lot of discussion this year around the possibility of recession, and when and if inflation will cool. ![]() First up, let’s take a look at the global economic outlook with our Chief Global Economist Bruce Kasman.īRUCE KASMAN: Thanks for having me, glad to be here. Today, we’re joined by a few of our colleagues from J.P. Morgan Research, who will be taking stock of what has happened so far in 2023 and exploring what’s ahead for markets in the second half of the year. HOST: Welcome to Research Recap’s Mid-Year Outlook, on JP Morgan’s “Making Sense”. Please enter a valid search, no special characters allowed. ![]()
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