“In what feels like the first time since the Babylonian era, we are making an upward revision to our U.S. GDP forecast,” he wrote in a note to clients.
He now sees the economy contracting at a modest rate in the current quarter, which ends in June, with growth resuming in the third quarter. By the middle of next year, he thinks GDP will be growing at a 4 percent rate. That ought to be strong enough to generate jobs (although JPMorgan made no change to its unemployment forecast, which shows the rate peaking at 9.5 percent in the fourth quarter).
Why the brighter outlook? Kasman says it is largely because the biggest drags on growth — namely housing, consumer spending on durable goods, business inventories and government spending — will either add to growth or become significantly smaller negatives in the coming quarters.
He also says that just as the recession was synchronized around the world, the recovery looks like to be a joint effort as well because of fast recoveries in parts of Asian and in some emerging economies.