Global Data Pod

First quarter global activity looks to have strengthened materially and, while we are looking for a deceleration in the current quarter, the March surveys are still pointing to strong momentum. Ahead of tomorrow’s US payroll report, we are expecting a slowing in job growth but to a still-solid pace. Combined with inflation that continues to run hot in most corners of the world, and in the US where next week’s core CPI is projected to have accelerated for a fourth straight month in March, central banks are caught between overheating and a potential credit crunch. 

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

The global expansion is looking even more resilient than expected, raising questions about the likelihood of our call for a US recession and global slowdown later this year. With global GDP growth over the past two quarters tracking a full %-point strong than expected in our November outlook, the profit margin compression we see as a catalyst for recession later this year has yet to start.  The latest credit shock could be a game changer, but healthy fundamentals are likely to temper the drag. While headwinds are building and supports are fading, either greater financial stress or more central bank tightening may be needed to take steam out of the expansion.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

The risk of a meaningful tightening in credit conditions raises the odds of a US recession and potentially a global one as well. However, it is unclear whether the fallout from recent events is a newly-added headwind or a consequence of central banks’ intended slowdown. For now, growth and inflation are running hotter than expected even if the credit shock is also larger than expected. Consequently, forecasts remain unchanged even if tail risks have fattened.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Nora Szentivanyi is joined by Michael Feroli to discuss the Fed’s response to the recent banking stress, historical parallels and the likely economic fallout. A rough estimate is that slower loan growth by mid-size banks could subtract 0.5-1% off the level of GDP in coming quarters. We believe this is broadly consistent with our outlook of a Fed-induced recession later this year. The Fed isn’t done, in our view, and we look for another 25bp hike this week, and a final hike in May.

 

 

This podcast was recorded on Mar. 21, 2023. This communication is provided for information purposes only. Institutional clients can view the related reports at https://www.jpmm.com/research/content/GPS-4361113-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Elevated financial market stress and uncertainty have arisen against a backdrop of sticky high inflation, still-tight labor markets, and recent upward revisions to growth in the US and China for this quarter. The ECB reacted to this quandary by hiking 50bp as previously signaled and maintaining a tightening bias, but removing any formal guidance and noting its available tools to address market dysfunction. We expect a broadly similar message from the Fed as it hikes 25bp next week.

Speakers:

Bruce Kasman

Michael Hanson

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

As we look to the coming spring, the data is anything but clear. This week’s news points to ongoing resilience while Chair Powell’s comments underscored that this may be too much of a good thing. Next week’s US CPI report looks to be hot yet again, moving the needle toward a 50bp Fed hike. The ECB is on deck for next week and has already pointed to 50bp. Also up next week will be the key China activity data for Jan-Feb.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

The news on the week points to even greater resilience in the global expansion and more upside surprises on inflation. What’s a worried central bank to do? With a number of key data releases and central bank meetings coming up in March, the various scenarios of our outlook are considered: from soft-landings, to boiling frogs, to wrathful old testament central banks.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Nora Szentivanyi is joined by Jahangir Aziz to discuss China’s reopening and spillovers to the rest of EM. A consumption and services-led recovery in China points to a more muted spillover than typically implied by China’s headline growth. But if the rebound and reduced growth volatility spur a positive shift in business sentiment, the full impact can be larger than the sum of the parts.

Speakers:

Nora Szentivanyi, Economic Research

Jahangir Aziz, Emerging Markets Economic and Policy Research

This podcast was recorded on March 1, 2023.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4341171-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

In this week’s Research Rap of the Global Data Pod, Bruce Kasman is joined by Joe Lupton and Alex Wise to discuss our recent special report on public sector debt sustainability. After gradually rising 35%-pt in the 30yrs since the mid-1970s, government debt in the developed markets has jumped roughly 50%-points in just 15 years. A framework is considered for assessing debt sustainability, while thoughts are provided exploring the path ahead.

Speakers

Bruce Kasman, Economic and Policy Research

Joseph Lupton, Economic and Policy Research

Alex Wise, Long-term Strategy

This podcast was recorded on 27 February 2023.

This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4340654-0.pdf  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Another week of data showing resilient growth—even strong in the case of the US—along with upside surprises in inflation add to the risks that the most rapid global hiking cycle in over forty years has longer to run. While we are willing to fade some of the signal in the punchy January data, the pressure is on for February data to show a return to the path of moderating growth and inflation in line with the goals of central banks to generate a soft-landing.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.