A top-level executive at banking titan JPMorgan Chase is warning that the US economy is slowing down, but says one catalyst could turn it around.
In a new interview on CNBC Television, JPMorgan Asset Management’s chief global strategist, David Kelly, says that the latest job and Consumer Price Index (CPI) data indicates the US economy is becoming sluggish.
“I think the economy is gradually grinding to a halt here… On inflation, these numbers are very close to in line with what we thought… Inflation is gradually going up. The economy is gradually slowing down. That’s what we thought tariffs are going to do. It’s going to slow growth, and it’s going to add to inflation…
Businesses don’t want to hire here. I don’t think there’s a huge ongoing jump in layoffs, but it’s getting harder and harder to find a job, because businesses are just frozen, because they don’t know what the playing field is going to be with regard to tariffs going forward.”
However, Kelly says that refunds from the recently approved federal tax cuts may start ending up in taxpayers’ pockets at the beginning of next year, which could give the US economy a major boost.
“All these new tax cuts, getting rid of the tax on tips, overtime, increase to the standard deduction, the SALT (Federal State and Local Tax deduction) tax break, all of them were made retroactive to January 1, 2025, but the IRS has not changed withholding schedules. That means that there’s going to be basically a full year’s worth of refunds on all of those tax breaks kick in the first few months of 2026. That is the equivalent of big stimulus checks.
Last year, the average income tax refund was about $3,200. This next year, in 2026, we think it’s going to be over $4,000 with 70% of households receiving that. That is like one big stimulus check, one big lump of sugar put into the economy early next year. If we can get to the first quarter without slipping into a recession, there will be some stimulus there. But I do think that between now and then the economy is going to be slowing in the fourth quarter.”
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