Global Data Watch Swing away-110319312

Global Economic Research13 September 2024J P M O R G A Nwww.jpmorganmarkets.comContentsDraghi on competitiveness in the EU: action needed13Australia: Deficit déjà vu15China: How policy can support consumption17Global Economic Outlook Summary4Global Central Bank Watch6Economic Activity Tracking8Selected recent research from J.P. Morgan Economics10J.P. Morgan Market Watch11Data Watches United States21 Focus: Recent immigration and unemployment rate28Euro area29Japan33Canada37Mexico39Brazil41Argentina43Andeans45United Kingdom47Emerging Europe51South Africa56Australia and New Zealand57China, Hong Kong, and Taiwan59Korea63ASEAN65India68 Regional Data Calendars70Economic and Policy ResearchBruce Kasman(1-212) 834-5515bruce.c.kasman@jpmorgan.comJPMorgan Chase Bank NAJoseph Lupton(1-212) 834-5735joseph.p.lupton@jpmorgan.comJPMorgan Chase Bank NANora Szentivanyi(44-20) 7134-7544nora.szentivanyi@jpmorgan.comJ.P. Morgan Securities plcManaging EditorMalcolm Barr(44-20) 7134-8326malcolm.barr@jpmorgan.comJ.P. Morgan Securities plcGlobal Data Watch•Expecting a 50bp Fed ease next week; limited passthrough to other CBs •Global core inflation remains sticky but goods price pressure may be fading•Asian export lift looks idiosyncratic as global IP softens •Next week: CBs deliver a differentiated set of outcomes and guidanceSwing awayIn assessing the coming path of DM policy rates through the lens of risk management, we have emphasized three important points. First and foremost, the balance of US risks has shifted substantially this quarter as inflation pressure eases while job growth materially slows. A shift in focus toward the labor market side of the dual mandate seen in recent Fed communications points to a break from the FOMC’s mid-year gradualism guidance. We look for 100bp of policy rate cuts in relatively short order, with next week’s meeting delivering a front-loaded 50bp move. Second, the US stands alone in delivering strong supply-side performance while also facing elevated recession risk. We thus do not expect a similar break from gradualism elsewhere, a point reinforced by recent communications from Western European central banks. Finally, there is significant two-sided risk around the 2025 rate path in which a tightly packed consensus forecasts an additional 100bp of US easing. This outcome is reasonable if inflation returns to target amid sustained positive supply side performance. But there is also a material risk that is followed by labor demand rebounds and inflation proves sticky, stalling Fed easing. Indeed, the easing in financial conditions associated with the successful front-loading of cuts will likely increase the risk of such an outturn. Better US inflation readings are contributing to the shift in risk as they calm the Fed’s fears arising from the 1Q24 spike. But inflation news, by itself, is not sufficient to warrant a discrete step-down in rates next week. Indeed, looking through this year’s up-and-down readings, core