JP Morgan Asset Management's Bob Michele says the U.S. economy is ending the year on strong footing, with companies and consumers handling tariffs better than expected and a Federal Reserve rate cut potentially adding momentum heading into 2026.
Tariffs Have Been Absorbed ‘Pretty Well’
Michele, who is JPMorgan Chase & Co.’s (NYSE:JPM) Chief Investment Officer and Head of Global Fixed Income, Currencies and Commodities, currently overseeing “$800 billion” in assets, said that the U.S. economy was in a “pretty good place,” while appearing on CNBC’s “Squawk Box” on Monday.
According to Michele, the U.S. economy is “gliding into year-end in a pretty good environment.” He added that “Corporate America seems to have absorbed the tariffs pretty well. The consumer is doing pretty well.”
He also said his team expects the Federal Reserve to further ease monetary policy 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 budgets for hiring and technology. “Everyone's gearing up for CapEx next year,” he said. “They're looking to ramp up some hiring. They're looking to build out whatever they're doing in AI.”
Recent Data Contradicts Claims
A spate of recent data, however, contradicts Michele’s claims, especially when it comes to inflation, consumer sentiments, Federal rate cuts and tariff-related pressures.
Average Americans have grown increasingly pessimistic about the economy, with the University of Michigan’s Consumer Sentiment Index dropping to 50.3 in November, its lowest level since June 2022. This comes amid a cooling job market, alongside rising inflationary pressures.
Moody's Analytics Chief Economist Mark Zandi said earlier this month that “Inflation is uncomfortably high and is set to accelerate further in the coming months,” while placing the blame squarely on President Donald Trump’s tariffs.
The ISM Manufacturing PMI has continued to decline, at 48.7 in October, down from 49.1 the prior month, while short of consensus estimates at 49.5.
Business leaders surveyed by ISM clearly point to the current tariff situation for the slowdown in manufacturing, while expressing their frustration over significant cost inflation and planning disruptions resulting from the same.
Expectations for a Federal Reserve rate cut have also pulled back sharply. The CME Group's FedWatch tool now shows a 53.4% probability that policymakers will keep rates unchanged at the Federal Open Market Committee meeting on Dec. 10.
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