JP Morgan Asset Management Bob Michel says the US economy is ending the year on strong footing, with businesses and consumers handling rates better than expected and a Federal Reserve rate cut potentially building momentum heading into 2026.
Rates have been absorbed ‘reasonably well’
Michele, who is that? JPMorgan Chase & Co.’s (NYSE:JPM) Chief Investment Officer and head of Global Fixed Income, Currencies and Commodities, who currently oversees “$800 billion” in assets, said the U.S. economy was in a “pretty good position” when he appeared on CNBC’s “Squawk Box” on Monday.
According to Michele, the U.S. economy is “sliding into the end of the year in a pretty good environment.” He added that “Corporate America seems to have absorbed the tariffs quite well. Consumers are doing quite well.”
See also: Trump’s claim about inflation is ‘a lie’ and a ‘break with reality’, says economist Justin Wolfers: ‘Prices are rising’
He also said his team expects the Federal Reserve to ease monetary policy further in December, which he said would be “a nice tailwind as we head into 2026.”
Michele added that companies preparing for next year are increasing their budgets for staff and technology. “Everyone is gearing up for CapEx next year,” he said. “They want to hire some more staff. They want to expand everything they do in AI.”
Recent data contradicts claims
However, a wave of recent data contradicts Michele’s claims, especially when it comes to inflation, consumer confidence, federal interest rate cuts and rate-related pressures.
The average American has become increasingly pessimistic about the economy, with the University of Michigan’s Consumer Sentiment Index falling to 50.3 in November, the lowest level since June 2022. This comes against the backdrop of a cooling labor market and rising inflationary pressures.
Moody’s Analytics Chief Economist Mark Zandi said earlier this month that “inflation is uncomfortably high and will increase further in the coming months,” laying the blame squarely on the president Donald Trump’s rates.
The ISM Manufacturing PMI has continued to decline, reaching 48.7 in October, compared to 49.1 the month before, while remaining below consensus estimates of 49.5.
Business executives surveyed by ISM clearly point to the current tariff situation for the slowdown in production, while expressing frustration over significant cost inflation and resulting schedule disruptions.
Expectations for an interest rate cut by the Federal Reserve have also fallen sharply. That of the CME group FedWatch The instrument now shows a 53.4% probability that policymakers will keep rates unchanged at the Federal Open Market Committee meeting on December 10.
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