J.P. Morgan's David Kelly: Economy Is Slowing, But Not Yet In Recession
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- September 06, 2025
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J.P. Morgan's Chief Global Strategist David Kelly recently offered a compelling and balanced assessment of the economic landscape, reassuring markets that while a slowdown is undeniably taking hold, the specter of an immediate recession remains at bay. Kelly’s analysis provides a crucial counterpoint to more alarmist narratives, painting a picture of a gradual deceleration rather than a precipitous decline.
According to Kelly, the bedrock of his optimistic yet cautious outlook lies in the fundamental resilience of key economic pillars.
He points to a still-robust labor market, where job growth, though moderating, continues to show strength. This sustained employment underpins consumer spending, which remains a significant engine of economic activity. Corporations, too, are largely demonstrating an ability to navigate current headwinds, with profit margins holding up better than some doomsayers had predicted.
However, Kelly is quick to acknowledge the shifting sands beneath the economy's feet.
The 'slowdown slowly' mantra isn't without its caveats. The cumulative effect of sustained higher interest rates by central banks, coupled with persistent if moderating inflation, is beginning to exert its influence. Sectors sensitive to borrowing costs, such as housing and certain manufacturing segments, are showing clear signs of cooling.
This measured deceleration is a deliberate outcome of monetary policy aimed at reining in inflationary pressures without tipping the economy into a deep downturn.
Kelly emphasizes that this period of gentle easing is a necessary rebalancing. As supply chains normalize and demand adjusts, the economy is shedding some of the excesses accumulated during the post-pandemic recovery.
The challenge, he suggests, is maintaining this delicate balance – bringing inflation down to target levels while avoiding significant job losses or a sharp contraction in economic output. J.P. Morgan's perspective, as articulated by Kelly, suggests that policymakers are currently threading this needle with a degree of success, charting a course towards a more sustainable growth trajectory without succumbing to the immediate threat of a full-blown recession.
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