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A lot of people aren’t feeling great about the economy right now. For example, Jamie Dimon said to brace for an “economic hurricane,” many experts are warning about an impending recession and the World Bank has cut global growth forecasts, warning us about stagflation.
On top of that, according to a new poll conducted by The Economist and YouGov, 55% of adults believe the US is currently experiencing a recession. 21% don’t believe the country is in a downturn, and 24% said they weren’t sure.
But there are still some optimists out there who think that the economy will end the year on a high note. Some of them, like economist Neil Dutta, argue that some significant factors are finally settling down after years of COVID, like low labor participation rates and high demand for durable goods, which have both contributed to inflation. Dutta suggests that as things get back to business as usual, the Fed should have an easier time dealing with inflation.
Others, like JPMorgan’s Marko Kolanovic, have pointed out that China is recovering from COVID, and as a result, its markets are being resuscitated. “Any incremental improvement from the lifting of lockdowns, relaxing regulations, and further stimulus, should be beneficial for Chinese stocks in the coming quarters,” Kolanovic wrote to clients earlier this week.
“You know, I said there’s storm clouds but I’m going to change it … it’s a hurricane,” said Jamie Dimon at a business conference in New York last week. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”
“It’s a bit of a rebalancing. So you should see a little bit less inflation, a little bit more real growth. That should all be risk positive,” said Neil Dutta, head of economics at Renaissance Macro Research. “As it’s happening, it will feel really good because inflation won’t be as strong as the Fed currently anticipates.”
“On the surface, this suggests that the economy hasn’t made much progress this year,” Jeffries economists Aneta Markowska and Thomas Simons wrote, referring to a US economic activity index on the rise. “However, under the hood, activity continues to normalize as the underlying components of our index slowly converge toward their pre-pandemic levels.”