JP Morgan (Shutterstock photo)
The CEO of the investment bank JP Morgan, Jamie Dimon, warns today (Monday) that there is a “very, very serious” mix of headwinds that may tip the American and global economy into recession by the middle of next year.
Dimon, the CEO of the largest US bank, says that the US economy is “actually still doing well” today and consumers are likely to be better off than they were in the global financial crisis of 2008. “But you can’t talk about the economy without talking about what’s going to happen — And it’s serious business,” Damon told Juliana Tettlebaum ofCNBC Today at the conference JPM Techstars in London.
Among the indicators that are setting off alarm bells, Damon noted the impact of rampant inflation, interest rates that rose beyond expectations, and Russia’s war in Ukraine. “These are very, very serious things that I think may push the US and the world – I mean, Europe is already in recession – and they are expected to put the US into some kind of recession starting six to nine months from now,” Damon said.
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His remarks come at a time of growing concern about the prospect of an economic recession as the Federal Reserve and other major central banks raise interest rates to combat rising inflation.
in conversation with CNBC Last month, Chicago Federal Reserve President Charles Evans said he was concerned the U.S. central bank was going too far, too fast in its attempt to tackle high inflation.
The Fed raised interest rates by three-quarters of a percent last month, the third consecutive increase of this magnitude. Fed officials also indicated that they would continue to raise interest rates well above the current range of 3% to 3.25%.
Dimon said that while the Fed “waited too much and did too little” as inflation soared to a four-decade high, the central bank was “definitely catching up.” He added, “And you know, from here, let’s all wish them success and keep our fingers crossed that they will be able to slow down the economy enough so that whatever happens, will be moderate – and that is possible,” he added.
Dimon said he couldn’t be sure how long a U.S. recession might last, adding that market players should prepare for a range of outcomes instead. “It could go from a mild crisis to a pretty severe one and a lot will depend on what happens with the war.” So, I think it’s hard to guess, be prepared.”
Dimon said the only guarantee he can be sure of is the volatile markets. He also warned that this could coincide with unsettled financial conditions.
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