Global economy is at a crossroads with recent energy shocks, says JPMorgan's Bruce Kasman

Summary

JPMorgan chief economist Bruce Kasman discusses the global economy at a crossroads due to energy shocks. He notes healthy momentum but warns of potential nonlinear oil price increases from inventory draws and shifting expectations. The Fed is expected to stay patient, though forward pressure to hike exists with persistent 3% inflation and tightening labor markets.

• Global economy shows healthy momentum in early 2025, driven by strong tech demand and improving business sentiment.
• Energy price drag from the Strait of Hormuz closure and inventory draws creates risk of nonlinear oil price increases.
• The Fed is an anchor for central banks and equity markets, expected to stay patient amid two-sided risks.
• Looking 6-9 months ahead, the Fed may face pressure to hike if growth and labor markets strengthen.
• Persistent 3% inflation and tight labor supply are expected to keep unemployment drifting down.
• ECB is highlighted as a potential central bank that could get nervous about inflation targets and raise rates.
• US job growth is expected to recover above 100,000 per month in coming months.