Arthur J. Villasanta – Fourth Estate Contributor
New York, NY, United States (4E) – JPMorgan Chase & Co., the largest bank in the United States, said the U.S. economy has a greater than 50-50 chance of tipping into a recession in the next two years.
The probability of a U.S. recession within one year is almost 28 percent, according to JPMorgan. It rises to more than 60 percent over the next two years, said the bank’s researchers wrote in a note to clients. Over the next three years, the odds are higher than 80 percent, according to the note.
In contrast, the Federal Reserve Bank of New York shows a 14.5 percent chance of a recession a year from now.
JPMorgan’s model includes indicators ranging from consumer and business sentiment to prime-age male labor participation, compensation growth, and durables and structures as a share of gross domestic product.
It maintained GDP growth at 4.2%. U.S. manufacturing showed continued strength in the PMI and ISM manufacturing indices. On the services side, the reading was still solid, while the ISM non-manufacturing index showed a considerable jump. Business activity across both services and manufacturing remains robust, said JPMorgan.
As for inflation, headline CPI cooled in September, up just 2.3% year-on-year compared to 2.7% last month, and a rise of 0.1% month-on-month. Core CPI (ex-food and energy) held steady at 0.1% month-on-month and 2.2% year-on-year to match August’s outcome. The bank believes inflation will remain stable despite record low unemployment and robust U.S. economic growth.
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