The US Economy: A Slowing Down Trend
The US economy is showing signs of slowing down, according to a top-level executive at JPMorgan Chase. David Kelly, the chief global strategist at JPMorgan Asset Management, recently shared his insights on the current economic situation in an interview on CNBC Television.
Latest Job and Consumer Price Index Data
Kelly pointed out that the latest job and Consumer Price Index (CPI) data indicates that the US economy is becoming sluggish. He stated, "I think the economy is gradually grinding to a halt here… On inflation, these numbers are very close to in line with what we thought… Inflation is gradually going up. The economy is gradually slowing down." This is largely due to the effects of tariffs, which are slowing growth and adding to inflation.
Impact on Businesses and Employment
The economic slowdown is also affecting businesses and employment. Kelly noted, "Businesses don’t want to hire here. I don’t think there’s a huge ongoing jump in layoffs, but it’s getting harder and harder to find a job, because businesses are just frozen, because they don’t know what the playing field is going to be with regard to tariffs going forward." This uncertainty is causing businesses to hesitate in making hiring decisions, leading to a tougher job market.
A Potential Catalyst for Economic Growth
However, Kelly believes that refunds from the recently approved federal tax cuts could provide a much-needed boost to the US economy. He explained, "All these new tax cuts, getting rid of the tax on tips, overtime, increase to the standard deduction, the SALT (Federal State and Local Tax deduction) tax break, all of them were made retroactive to January 1, 2025, but the IRS has not changed withholding schedules. That means that there’s going to be basically a full year’s worth of refunds on all of those tax breaks kick in the first few months of 2026." This could result in a significant stimulus to the economy, with the average income tax refund expected to be over $4,000, with 70% of households receiving it.
Economic Outlook for 2026
Kelly predicts that the economy will continue to slow down in the fourth quarter, but the refunds from the tax cuts could provide a stimulus in the first quarter of 2026. He stated, "If we can get to the first quarter without slipping into a recession, there will be some stimulus there." This could help to turn the economy around, but it’s crucial to monitor the situation closely to avoid a recession.
Conclusion
In conclusion, the US economy is currently showing signs of slowing down, due to the effects of tariffs and uncertainty among businesses. However, the refunds from the federal tax cuts could provide a catalyst for economic growth in 2026. It’s essential to keep a close eye on the economic situation and be prepared for any potential changes. As investors, it’s crucial to do your due diligence and make informed decisions to minimize risks. Remember, the economic landscape is constantly evolving, and staying informed is key to making smart financial decisions.
