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Economic Recovery Could Slow In Q4, JPMorgan Chief Global Strategist Warns

Economic Recovery Could Slow In Q4, JPMorgan Chief Global Strategist Warns

The economic recovery in the fourth quarter could slow once the stimulus fades off, JPMorgan Asset Management’s David Kelly told CNBC.

Interview Highlights: "It looks like an economic recovery, but it's actually a steroid kind of recovery," said Kelly.

America's largest bank, JPMorgan Chase & Co's (NYSE: JPM) Asset Management chief went on the explain that the stimulus was a shot in the arm and its effects will fade off soon. 

Unless the pandemic is fully suppressed, people will not go to hotels, cinemas, or travel in crowds, which will make the fourth-quarter economic growth slower than the third.

The current economic recovery is not a V-shaped recovery, but it's "a V-interrupted recovery," Kelly said.

Only half the jobs lost have been recovered in the U.S. and it is "still going to be a crawl" until industries can be reopened.

The U.S. immigration has dried to nothing, and if President Donald Trump is re-elected, there will be very little immigration, Kelly told CNBC.

"With more people retiring, the working population is shrinking over time. The U.S. needs immigration to grow its workforce," he added.

The unemployment rate is at 7.9% but is still more than double its pre-pandemic levels. "You need to deal with the pandemic to have a healthy recovery, it’s as simple as that."

Why It Matters: The negotiations around the second stimulus package have reached a stalemate.

Kelly said the country will get a stimulus after the November presidential elections. 

"I think people are obsessed with the issue of, do we get stimulus in the next two weeks. What’s been going on between the White House and the House Democrats are all to do with politics. After the elections, I think there will be a stimulus package," said Kelly.

"I think if anything there’ll be too much stimulus," he added.

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Nov 2020Morgan StanleyDowngradesOverweightUnderweight
Nov 2020Keefe, Bruyette & WoodsDowngradesOutperformMarket Perform
Oct 2020Credit SuisseMaintainsOutperform

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