JPMorgan's chief economist says there's no reason to be worried about a US recession, with the private sector in 'remarkable' shape

• There's no real reason to be worried about a US recession, according to JPMorgan's top economist.
• Bruce Kasman told Bloomberg TV that US consumers and companies are in "remarkable" shape.

There's no reason to be worried about a US recession, JPMorgan's chief economist has said, thanks to a private sector that's in "remarkable" shape.

With inflation soaring, the Federal Reserve raising interest rates, and Russia's invasion of Ukraine, many analysts have become fearful that US growth could go into reverse.

But Bruce Kasman, JPMorgan's chief economist, told Bloomberg TV Monday that although the economy is likely to slow, the risks of a recession over the next 12 months are low.

"There's no real reason to be worried about a recession," he said. "I think you'd have to get hit by much bigger shocks to really talk about recession anytime in the next 12 months or so."

Kasman said that inflation — which is running at 40-year highs in the US — and a rise in interest rates posed problems for the economy. Yet he said Americans had built up enough savings to keep spending even in the face of much higher prices.

"I think what we have here is a pretty powerful tension between drags that are not going away and a very resilient private sector, with the health of both households and corporates being quite remarkable right now," he told Bloomberg.

Kasman's comments came a week after his boss, JPMorgan CEO Jamie Dimon, said there is a "hurricane" bearing down on the US economy. Dimon cited the Fed's unwinding of quantitative easing and a jump in oil prices due to the war in Ukraine.

However, Kasman said the real storm could be a way off. The economist said the Fed does not want to whack growth in the near-term but may have to raise rates more sharply later on to tame inflation.

Investors currently expect the Fed to raise interest rates to above 3% by the middle of 2023, according to the CME FedWatch tool, from a range of 0.75% to 1% currently. But Kasman said more might be needed at some point.

"The Fed does not want to create a recession right now," he said. "The Fed is tolerant of inflation above 2%. So this is gonna take time before we get to the point where the Fed really has to hurt us."

In the meantime, Kasman said, "the US household sector has every ability to continue to absorb drags from higher inflation."

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