Dimon said in June that he was preparing the bank for an economic “hurricane” caused by the Federal Reserve and Russia’s war in Ukraine.
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JPMorgan Chase Chief Executive Officer Jamie Dimon warned Monday that a “very, very serious” combination of headwinds is likely to push the US and global economies into recession by the middle of next year.
Dimon, chief executive of the largest US bank, said the US economy is “still doing well” today and consumers are likely to be in better shape compared to the global financial crisis. from 2008.
“But you can’t talk economics without talking about future stuff, and this is serious stuff,” Dimon told CNBC’s Julianna Tatelbaum on Monday at the JPM Techstars conference in London.
Among the indicators sounding alarm bells, Dimon cited the impact of runaway inflation, interest rates rising higher than expected, the unknown effects of quantitative tightening and Russia’s war in Ukraine.
“These are very, very serious things that I think are likely to push the United States and the world, I mean, Europe is already in a recession, and they are likely to put the United States in some kind of recession within six to nine months.” Dimon said.
His comments come at a time of growing concern about the possibility of an economic recession, as the Federal Reserve and other major central banks raise interest rates to combat runaway inflation.
Speaking to CNBC last month, Chicago Fed President Charles Evans said he worries the US central bank is going too far, too fast in its attempt to tackle high rates of inflation.
The Fed raised benchmark interest rates by three-quarters of a percentage point last month, the third straight hike of that size. Fed officials also indicated that they would continue to raise rates well above the current range of 3% to 3.25%.
Dimon said that while the Fed “waited too long and did too little” as inflation jumped to four-decade highs, the central bank “is clearly catching up.”
“And, you know, from here, let’s wish them success and keep our fingers crossed that they’ve managed to slow the economy down enough that whatever it is, it’s mild, and it’s possible,” he added.
‘Guessing is hard, prepare yourself’
Dimon said he couldn’t be sure how long a US recession might last, adding that market participants should weigh a variety of outcomes instead.
“It can go from very mild to quite difficult and a lot will depend on what happens with this war. So I guess guessing is hard, be prepared.”
Dimon said the only guarantee he could be sure of was volatile markets. He also warned that this could coincide with disorderly financial conditions.
Asked for his opinion on the prospects for the S&P 500Dimon said the benchmark could still drop “another easy 20%” from current levels, adding “the next 20% would be a lot more painful than the first.”
Speaking to a roomful of analysts and investors in early June, Dimon said he was preparing the bank for an economic “hurricane” caused by the Federal Reserve and Russia’s war in Ukraine.
“JPMorgan is gearing up and we’re going to be very conservative with our balance sheet,” Dimon said at the time. He advised investors to do the same.
Market participants are monitoring a much-anticipated inflation print on Thursday, as well as a slew of corporate earnings.
JPMorgan is scheduled to release third-quarter financial results on Friday.
The bank’s shares are down about 33% so far this year.
Correction: This story has been updated to accurately describe the Federal Reserve’s current actions.
Source: news.google.com