Economist David Roche predicts global recession avoidance and central bank policy shifts

Veteran strategist David Roche believes that the global economy will avoid a recession, but central banks will need to "change the goalposts" on inflation. Despite concerns about high inflation, Roche argues that labor markets and disposable income are behaving differently this time, suggesting that a catastrophic collapse in employment, which would lead to a recession, is unlikely. Roche suggests that central banks may need to change their inflation targets or subtly shift their goals to bring inflation back towards the desired levels without causing a long period of pain. However, JPMorgan Asset Management warns that the current market positioning is built on an economic outlook that is "too good to be true," and that a meaningful hit to growth is necessary for core inflation to reach tolerable levels. Higher volatility and pressure on total returns across risk assets are expected in the coming months.