Economists at JPMorgan predict a “mild recession” in the United States in the second half of next year, given expectations that the Federal Reserve will tighten monetary policy further in its battle against inflation.
The investment bank forecasts the economy contracting by 0.5% in the fourth quarter of next year and possibly dragging into 2024. That should reduce US Gross Domestic Product (GDP) in 2023 to 1%, nearly half of its forecast for 2022.
JPM expects another 100 basis points of rate hikes by the Fed by March 2023, after rising more than 300 basis points so far this year. A 50-point rise is expected in December, followed by two 25-point rises in February and March.
The institution sees consumer price inflation in the US decreasing to 4.1% by the end of 2023. In October, the rate was 7.7%. The PCE index, the Fed’s preferred measure of inflation, is expected to moderate to 3.4% next year.
The resulting slowdown in aggregate demand could lead the US economy to eliminate more than a million jobs by mid-2024, which could influence the Fed to cut rates by 50 basis points per quarter starting in the second quarter of 2024, said JPM.
Source: CNN Brasil
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