JPMorgan slashes its forecast for US economic growth amid lack of new stimulus - Business Insider

is the latest Wall Street bank to slash its US economic growth forecast due to weakened hopes for near-term stimulus.

The lack of fresh fiscal aid has an "immediate impact" on household incomes and will drive a contraction in disposable income into 2021, Michael Feroli, the bank's chief economist, said in a Thursday note. Household incomes will face the "most immediate impact" from the lack of additional fiscal aid, Feroli said. Another spending package would drive a 24% annualized increase in disposable income through a second round of relief checks and the resumption of expanded unemployment benefits, according to the bank. Instead, the lack of a near-term bill will drive a 12% contraction in disposable income next quarter.

The absence of a new stimulus bill has its upsides, the economist added. JPMorgan lowered its 2021 fiscal deficit estimate to $2 trillion from $3.5 trillion in the note, citing the lack of a deal. The forecast stands to change further before the year is out, as the presidential election's outcome can change the outlook for federal spending plans.

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