JPMorgan Chase CEO Jamie Dimon is warning that a recession could hit the United States within the next six to nine months.
Conceding that the U.S. economy is “actually still doing well” at the moment, Dimon, one of the foremost voices in finance, theorized that a “very, very serious” storm of economic headwinds could soon converge and tip the economy into recession territory in the not-too-distant future.
JAMIE DIMON WARNS OF ECONOMIC ‘HURRICANE’
“You can’t talk about the economy without talking about stuff in the future — and this is serious stuff,” Dimon told CNBC’s Julianna Tatelbaum Monday.
“These are very, very serious things which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now,” he added.
Dimon has sounded the alarm about the economy in the past. In June, he rattled investors by warning that an economic “hurricane” was looming. The JPMorgan chief has long been outspoken with his views on public policy and frequently offers his outlook on the U.S. economy.
In August, the Bureau of Economic Analysis revealed the U.S. economy contracted at an annualized rate for the second quarter in a row, often a benchmark used to define a recession. However, the National Bureau of Economic Research declined to declare a recession officially.
Despite the lackluster gross domestic product figures, some aspects of the economy appear to be humming along. The most recent unemployment figures for September came in around 3.5%, down from the prior month and near record lows. Typically, in a recession, unemployment figures spike up.
However, inflation continues to grip the nation. For the 12 months ending in August, inflation came in at a hot 8.3%, which is notably down from the prior month but exceeded expectations. That spooked markets, in part because it signaled that the Federal Reserve would likely continue jacking up interest rates and tightening monetary policy.
The Fed recently bumped up rates by three-quarters of a percentage point last month. Dimon surmised that the Fed “waited too long and did too little” on inflation during the early days and said he wasn’t sure if Fed Chairman Jerome Powell could achieve a “soft landing.”
“From here, we — let’s all wish him success and keep our fingers crossed that they managed to slow down the economy enough so that whatever it is, is mild — and it is possible,” Dimon told CNBC.
Some finance gurus, such as Wharton professor Jeremy Siegel, have fretted that the Fed could be pumping the brakes too hard. In addition to the prospect of the Fed sucking the wind out of the economic sails, economic troubles abroad could ripple back home domestically, according to Dimon.
Europe is staring down an energy crisis exacerbated by the war in Ukraine. OPEC+ recently announced plans to slash oil output by 2 million barrels a day, likely ushering in higher prices at the pump at home. Furthermore, China’s economy has slowed dramatically amid its real estate woes and stringent COVID-19 policies.
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Dimon previously explained that JPMorgan Chase, the largest nongovernment U.S. bank, plans to be “conservative with our balance sheet” as it braces for an economic storm. In his CNBC interview, he acknowledged that he wasn’t sure how severe a recession could be.
“It can go from very mild to quite hard and a lot will be reliant on what happens with this war. So, I think to guess is hard, be prepared,” he told the outlet.
The banking titan also hypothesized that the benchmark S&P 500 could plummet downward by “another easy 20%.”
