JPMorgan slashes its forecast for US economic growth amid lack of new stimulus
is the latest Wall Street bank to slash its US economic growth forecast due to weakened hopes for near-term stimulus.
The lack of fresh fiscal aid has an "immediate impact" on household incomes and will drive a contraction in disposable income into 2021, Michael Feroli, the bank's chief economist, said in a Thursday note. Household incomes will face the "most immediate impact" from the lack of additional fiscal aid, Feroli said. Another spending package would drive a 24% annualized increase in disposable income through a second round of relief checks and the resumption of expanded unemployment benefits, according to the bank. Instead, the lack of a near-term bill will drive a 12% contraction in disposable income next quarter.
The absence of a new stimulus bill has its upsides, the economist added. JPMorgan lowered its 2021 fiscal deficit estimate to $2 trillion from $3.5 trillion in the note, citing the lack of a deal. The forecast stands to change further before the year is out, as the presidential election's outcome can change the outlook for federal spending plans.
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