Recession or No Recession? Here’s the Latest Verdict…

Thanks to the recent strong economic data, economists are once again revising their recession outlooks.

• Per WSJ’s Economic Forecasting Survey, the odds of a recession in the next 12 months fell for the first time this year — from 61% to 54%, with ~60% of surveyed economists optimistic due to slowing inflation.
• Which also means a soft landing is back on the table — a scenario where the Fed raises rates without triggering a recession.

Allianz SE’s chief economic adviser said, “You cannot get in the way right now of the soft-landing… that narrative is building momentum” (BBG).

Backing up this scenario are the latest bank earnings from JPMorgan, Citigroup and Wells Fargo — which came in above expectations. At the expense of smaller competitors, large institutions have benefited from customers moving deposits away from smaller banks.

Checking in on the economy…

Here’s what JPMorgan’s CEO Jamie Dimon has to say about the US economy — which “continues to be resilient.”

• On consumers: “Balance sheets remain healthy, and consumers are spending, albeit a little more slowly.”
• On jobs: “Labor markets have softened somewhat, but job growth remains strong.”

Yes, but… Consumers are dipping into their savings and retirement funds — and further interest rate hikes risk breaking the economy. The Fed will make their decision during next week’s meeting.