Tags: jpmorgan | recession | worry | cause

JPMorgan: Worry Over Impending Recession Might Actually Cause One

dollar and clock face, concept of economic recession
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By    |   Tuesday, 06 November 2018 05:20 PM

JPMorgan Chase's retail chief predicts that worry over an impending U.S. recession might actually cause one.

"This late-cycle recession has the potential to become a self-fulfilling prophecy," JPMorgan Chase Co-President Gordon Smith said Tuesday during a financial conference held in New York, CNBC.com reported.

"There is a great deal of volatility in the equity markets, a great deal of conversation around how late we are in the cycle and worry about the cycle," Smith said.

"That will ultimately lead to business confidence deteriorating, it will ultimately lead to [corporate] reductions in spending, that will ultimately lead to a shorter work week for hourly-paid people, which will ultimately lead to unemployment beginning to rise, and we would've developed our own recession," Smith said.

Smith, who runs JPMorgan's consumer banking division, says the U.S. economy looks "extremely strong," CNBC.com quoted him as saying.

"All the data would suggest that the economy is strong," Smith said. "But there is the danger, that just through the rhetoric and the concern, that we actually do push ourselves into an earlier recession than we normally would have."

Late last month, JPMorgan 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, and rises to more than 60 percent over the next two years, researchers wrote in a note, according to a model tracked by JPMorgan.

Over the next three years, the odds are higher than 80 percent, according to the note.

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.

The bank’s gauge is more pessimistic than a recession tracker maintained by the Federal Reserve Bank of New York, which shows a 14.5 percent chance of a recession a year from now.

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JPMorgan Chase's retail chief predicts that worry over an impending U.S. recession might actually cause one.
jpmorgan, recession, worry, cause
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2018-20-06
Tuesday, 06 November 2018 05:20 PM
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