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JPMorgan’s Growth Forecasts Edged Higher

  • Following yesterday’s data, JPMorgan are slightly upgrading their GDP forecasts. The strength of non-cyclical sectors led JPM to revise up their Q4 GDP estimate from -0.4%, to stability, close to the nowcaster estimate.
  • This change drives their 2023 and 2024 GDP projections up by a tenth to 3% Y/y and 1.6% Y/y, respectively.
  • The story remains the same: elevated private sector savings should continue to underpin strength in 2024, particularly amid economic stimulus in China and resilience in US. Sequentially, JPM expect GDP growth to reaccelerate in the 1H of next year and remain above potential next year, with a deceleration to trend-like growth only in 2025.
  • JPM note that a short-term risk to those forecasts is the pending stock of court-ordered debt, which currently stands at 0.9% of GDP. If the administration prefers to pay up the stock and clean its balance sheet already by the end of this year, even considering a small fiscal multiplier, the size of this payment could support GDP growth and keep inflation somewhat higher shortly after too.

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