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JPMorgan economists no longer anticipate a U.S. recession this year.

The change in sentiment comes as the U.S. economy continues to expand at a healthy pace.

“Given this growth, we doubt the economy will quickly lose enough momentum to slip into a mild contraction as early as next quarter, as we had previously projected,” the economists wrote in a note.

“While a recession is no longer our modal scenario, risk of a downturn is still very elevated. One way this risk could materialize is if the Fed is not done hiking rates. While we and the markets think it is done, it probably wouldn’t take much of an upside inflation surprise for the FOMC to deliver the extra rate hike that was signaled in the June dots, with perhaps even more to come.”

Instead, they say recession risks are now elevated for the next year. JPMorgan also expects the Fed to start cutting rates in the third quarter of the next year.

Source: Investing.com