JP Morgan takes a different stand than Wall Street - US Q1 GDP will decline.

[Juggy777]

I don’t know about you’ll but I was expecting US Q1 GDP to rise marginally, and even Wall Street was sharing a similar sentiment that Q1 GDP will bounce upwards, but JP Morgan has sensationally claimed that US Q1 GDP will not be rising upwards.

It’s also pertinent to note that by taking such a stance, they have become the first bank which has openly suggested that US Q1 GDP will be weak, and this is not a news that Americans would like to hear.

Lastly anyone here feels that their prediction could go wrong?, because I’m sincerely wishing it does go wrong.

JPMorgan economists now see an economic contraction in the first quarter due to the spreading coronavirus and related restrictions being imposed by states and cities.

The new forecast is a departure from Wall Street’s widely held view that the first quarter would be positive, with an improving economy throughout 2021.

Source:

https://www.cnbc.com/2020/11/20/jp-morgan-says-first-quarter-gdp-will-decline-because-of-rising-covid-cases-and-restrictions.html

[1715464454]

1715464454

[1715464454]

1715464454

[1715464454]

1715464454

[1715464454]

1715464454

[1715464454]

1715464454

[Lucius]

It is difficult to say what will happen in the coming months in the US regarding the pandemic, but if the EU scenario happens there, it is not at all logical to expect that GDP will grow in Q1. While the positive news is that we reportedly have a vaccine that is 95% successful, the question is how quickly it can be produced in sufficient quantities, and then how quickly as many people as possible can be vaccinated.

I think the whole world is facing a few more months of a very difficult period, especially for those living in the Northern Hemisphere where winter has already begun - but I think Q2&Q3 will already start to show significant growth because we will have some good vaccines that will provide immunity to millions of the world.

I also think that the new US president will bring some new positive changes that will benefit the American economy, and that will have a positive impact on the overall world economy.

[Upgrade00]

They also had a gloomy prediction earlier in the year about the 2nd quarter; JP Morgan economist says U.S. GDP could drop 14% in second-quarter, and that economic period actually turned out to be very poor as it decreased by about 31.7%

Lastly anyone here feels that their prediction could go wrong?, because I’m sincerely wishing it does go wrong.

Of course it could go wrong, that is why it's a prediction. A lot of factors would play a vital role in the economic revival process of the coming months;
• Development and distribution of vaccines,
• Emerging of new MSMEs to replace those which have been lost,
• Fiscal policies which would be initiated to manage inflation and money flow,
• Disruption in globalization as some countries may adopt a DIY approach as well as due to diplomatic fallouts,
• Reaction of people to the economy and also permanent adjustment in some sectors due to health concerns.

I would take a positive side and hope the spread of a vaccine would also spread hope and revitalize key sectors.

[Hydrogen]

If Joe Biden assumes office and hikes taxes on the rich. They'll move to another country in protest of Biden's unfair taxes. GDP will decline.

If Joe Biden assumes office, hikes taxes and introduces harsh regulation on corporations like google, microsoft, tesla and amazon. They'll layoff US workers, cut jobs & move to another country. US GDP will decline.

Trump encouraged business and one percenters to move into the united states and invest in the country through tax cuts. If that statement is true. Would it make sense for Joe Biden and his expected massive tax hikes to carry an opposite effect?

[Darker45]

They have their own bases in releasing such prediction. Personally, though, I think the recovery phase is about to start late this year or early next year. Moderna's COVID-19 vaccine is said to have reached 95% efficacy. Apart from that, Pfizer is also announcing that their own COVID-19 vaccine is also 95% effective. These are giant breakthroughs considering that we have been more or less blindly battling against the virus for the past 1 whole year at least.

This brings in the much needed confidence and boost which will certainly affect the economy as a whole. So I guess the restrictions will start to ease up in the weeks that follow. And the business community will start making profit.

As regards politics, I guess the earliest days of a new administration bring more good tidings rather than bad. I believe a fresh start of an administration who is just freshly chosen by the majority affects the economy positively rather than negatively.

[davis196]

If Joe Biden assumes office and hikes taxes on the rich. They'll move to another country in protest of Biden's unfair taxes. GDP will decline.

If Joe Biden assumes office, hikes taxes and introduces harsh regulation on corporations like google, microsoft, tesla and amazon. They'll layoff US workers, cut jobs & move to another country. US GDP will decline.

Trump encouraged business and one percenters to move into the united states and invest in the country through tax cuts. If that statement is true. Would it make sense for Joe Biden and his expected massive tax hikes to carry an opposite effect?

The GDP isn't created solely by the rich.It's created by the middle class and the working class.
Biden will raise taxes on the rich,but the government will provide more financial support to the middle class,small businesses and the unemployed.
The big tech companies(Google,Amazon,Microsoft,etc.) were making big profits during the pandemic.Now it's time for them to take bigger responsibility and pay higher taxes.
Anyway,the US GDP might go down in Q1 due to new lockdowns and the continuing pandemic,but the economy will slowly start to recover by the end of 2021(if the vaccine really works).

[exstasie]

JPMorgan economists now see an economic contraction in the first quarter due to the spreading coronavirus and related restrictions being imposed by states and cities.

The new forecast is a departure from Wall Street’s widely held view that the first quarter would be positive, with an improving economy throughout 2021.

Source:

https://www.cnbc.com/2020/11/20/jp-morgan-says-first-quarter-gdp-will-decline-because-of-rising-covid-cases-and-restrictions.html

Sounds reasonable to me. A lot of the earlier Wall Street forecasts didn't foresee how bad the 2nd wave of COVID-19 was going to be. There won't be full blown lockdowns like in March but new restrictions (on hours, occupancy, etc.) at the state and local levels are coming down every day. That has to have some cumulative effect on economic demand in Q1. The atmosphere of fear and restrictions on gathering sizes are also driving people to stay home again, which should cause further declines in output.

[sheenshane]

IMO, IF Biden will really implement his plan of another 4 to 6 weeks lockdown by the time he takes over the presidency in January then it will not give a boost to the GDP in the first quarter of 2021 for the US economy.  A similar scenario will happen as it was first implemented by Trump back in March where the economic recession has pulled down GDP by 32.9% which may not be far if Biden will push the lockdown on the first quarter of next year.

This can only be speculation and only IF Biden will push his plan, but on the other hand, I really hope that another recession will not happen again that would impact the global economy.

[stompix]

They also had a gloomy prediction earlier in the year about the 2nd quarter; JP Morgan economist says U.S. GDP could drop 14% in second-quarter, and that economic period actually turned out to be very poor as it decreased by about 31.7%

The article was written on March 18, 2020, the first state that issued a stay at home order was California, just one day after that, and the death toll was just ~50 at that time. Interesting enough, just one month after they went fully pessimistic and overboard :
JPMorgan now sees economy contracting by 40% in the second quarter

Actually, if you go over their prediction history they swing a lot depending on what measures will be taken to combat the epidemic, but as nobody was certain about those either it was an impossible and almost useless task and this one is close by, nobody really knows for sure what the government and states will do next month, let alone next year.

IMO, IF Biden will really implement his plan of another 4 to 6 weeks lockdown by the time he takes over the presidency in January then it will not give a boost to the GDP in the first quarter of 2021 for the US economy.

There will be no lockdown, even he is slowly abandoning that plan:
https://www.businessinsider.com/biden-national-shutdown-lockdown-says-he-wont-shut-down-2020-11
Reduce capacity in restaurants and pubs? That's no lockdown, that's a loldown.

[el kaka22]

This could be regarding Biden becoming president in Q1 as well, I doubt it is directly related because Biden will probably not do anything to hurt rich people since he got like 50+ billionaires (and companies) donate to him, which is why I doubt he would be capable of doing something that would hurt them as well.

I understand that democrats think that Biden will be much better than Trump when it comes to being a president, and I do agree that in some topics he will be, but when it comes to corporate greed and doing what the corporate lords wants, Biden and Trump doesn't feel like two different people, they both work for the rich people. The only difference Biden and Trump would have would be how nice and soft Biden speaks and things he says are nice, whereas Trump usually is devise whenever he says something and either gets a lot of love from some, and hate from others. That's the only difference.

[BrewMaster]

it has always been very hard to predict US economy since it is too controlled by the corrupt banking system and the wealthy elite. we know all these predictions are mostly political where one group doesn't like the winning president they keep spreading negativity. we also know that when there is FUD there is always some truth hidden inside of it to make it believable too.
in this case the COVID effects on the economy has been real and very severe. we also have an enormous amount of money that was printed and with the inflation it will bring, there will be a lot of lay offs by companies big and small alike and the rate of unemployment will increase even further resulting in a decreased GDP.

[The Sceptical Chymist]

It’s also pertinent to note that by taking such a stance, they have become the first bank which has openly suggested that US Q1 GDP will be weak, and this is not a news that Americans would like to hear.

You know, it's common that when things are extremely shitty with regard to the economy, politicians and big banks make a lot of bullish statements.  They most likely know that what they're saying isn't true, but they do it to soothe the public's anxiety.

JP Morgan seems to be giving it to us straight, IMO.  With all the business closures and unemployment, I sure as hell wasn't expecting this year or 2021 to be rosy.  I couldn't tell you whether JPM is correct or not, but at least they're not trying to blow sunshine up our buttholes.  The stock market has been booming for over a decade now, and I'm not sure why it's still booming.  One thing I do know is that the good times don't last forever, and the market is long overdue for a crash. 

But we'll see.  I hope JPM is wrong, but my gut is telling me that they're not.

[Gozie51]

Lastly anyone here feels that their prediction could go wrong?, because I’m sincerely wishing it does go wrong.

Yes I feel otherwise. The American economy should start improving at least in the first quarter because come January next year, a new administration will be in to take the system to another stage. The new administration is suppose to bring direction to the investors because at the moment, the uncertainty of the election is not giving proper economy direction for investors. By the new administration coming in, more investors confidence will grow and the economy will improve  at least in the first quarter.

[Hydrogen]

The big tech companies(Google,Amazon,Microsoft,etc.) were making big profits during the pandemic.Now it's time for them to take bigger responsibility and pay higher taxes.

The media cites US stock market trends from march 23rd 2020 to the present. To claim US tech is "profiting" from the pandemic. Those who have seen the chart know stock averages are merely returning to pre corona crash levels.

Biden will raise taxes on the rich,but the government will provide more financial support to the middle class,small businesses and the unemployed.

Can governments provide greater financial support, if tax revenues decline?

Could it be fair to say corporations and the rich are a major source of revenue for governments? If Trump's tax cuts increased tax revenues. Does it naturally follow for tax hikes to carry an opposite effect?

Anyway,the US GDP might go down in Q1 due to new lockdowns and the continuing pandemic,but the economy will slowly start to recover by the end of 2021(if the vaccine really works).

I think it depends on the number of corona strains active in the world. And how many of those strains the vaccine is effective against.

If there are 8 strains and the vaccine is only effective against 1 strain, a vaccine won't make a difference.

[sana54210]

JP Morgan is not really a place that shines during the brightest hours of the day, they are known to be a place that purchases not only huge shares in big companies with the money they have, but also take control of it as well, they are big players and when do you think else they could do that other than the whole economy crashing down?

If the whole market is down, that means your cash in hand could purchase a lot more things compared to a shining market, when companies worth double what they are worth right now, it is hard and frankly not smart to buy shares, but when they are down and crashing and everything looks horrible, you can buy a ton of their shares and make a big return later on when the markets recover. So they are constantly bear in order to keep buying at good prices.

[chip1994]

 In my opinion, the GDP in Q1 of the US will definitely decrease. The COVID epidemic has not been controlled and people still have a lot of limitations in direct contact. That leads the service industry to remain unprofitable and it is difficult for them to revive when the vaccine has not been announced.
On Wall Street is no different from the Crypto market. Everyone there was trying to shill back to the future market in the hope of selling stocks at high prices to minimize their capital losses. In the financial market, we should not believe anything from outsiders, just believe in our own analysis.

[mindrust]

If Joe Biden assumes office, hikes taxes and introduces harsh regulation on corporations like google, microsoft, tesla and amazon. They'll layoff US workers, cut jobs & move to another country. US GDP will decline.

I hope Biden does exactly this.

If the election results were fair and honest, it means the American people wanted this outcome.

Now they have to live through it.

[mindrust]

I hope Biden does exactly this.

If the election results were fair and honest, it means the American people wanted this outcome.

Now they have to live through it.

making tax collections for large platforms will provide a lot of profit in his country because it is certain that state finances will increase and can be used for the development of infrastructure and the economy in his country, maybe this will be done in mid-term because it feels too fast to immediately implement this the first time become president in his country.

That's if those big corps don't find a new base in some other country and pay their taxes to their new owners. Otherwise, good plan.

[stompix]

making tax collections for large platforms will provide a lot of profit in his country because it is certain that state finances will increase and can be used for the development of infrastructure and the economy in his country,

Developing an economy with high taxes?
You, realize what you're saying?

We did all this crap in Europe, with high taxation, minimal wages, taxing companies and you know what we have killed? Small business, we have killed small manufactures so many times that when the pandemic hit we weren't unable to produce some face masks! You know, that piece of 5x10 cloth with a rubber band, it took months of mobilization to finally be able to produce enough...

This is what taxation brings, we taxed the shit out of everything, if it weren't for the huge numbers of people employed in what is left of the industry with things like car manufacturers or a few others we would have arrived at a point where there is no way you can produce anything. Taxation kills business, there is no way in hell you can tax something and expect better things to come from.

I hope Biden does exactly this.
If the election results were fair and honest, it means the American people wanted this outcome.
Now they have to live through it.

Not nice from you but not nice from me also, as I grab my popcorn and I'm going to enjoy this show.
People in the US think they can achieve what other countries they mislabel socialists have done, like Sweden and Denmark. Nice...I can't wait to see how long it will take, probably less than a decade to go Venezuela style.