Jamie Dimon Warns That “Something Worse” Than a Recession May Be on the Way

JPMorgan Chase chief executive Jamie Dimon estimates only a 10% likelihood of an economic downturn that doesn’t lead to a recession, while ominously warning there are 20% to 30% probabilities of “something worse.”

Despite the “good shape” of consumer balance sheets and business financials, the bank’s chief warned clients on a call that “storm clouds are ahead,” as reported by sources. Hiked fed rates, quantitative tightening, oil shocks, the crisis in Ukraine, and escalating U.S. relations with China have prompted Dimon to assume that a mild recession has a 20% to 30% possibility, while a harsher recession has the same odds. What, then, is the final result?

“Maybe something worse,” he said. Dimon underlines it is a mistake to point to any single-point prognosis as to what will happen with the U.S. economy, but he has a lot to be pessimistic about.

Confidence is low, Dimon claims, “because of inflation, because of partisan politics, and a lot of leftover anger from COVID-19.” He thinks it’s “highly unlikely” that inflation will fall to the Fed’s target of 4% by the end of the year from its current 8% level.

Furthermore, Dimon states, “I wish we had the spirit that we were all here to work together, but it seems we just got nastier somehow.”

CEO Predictions for Recession

While not specific, JPMorgan’s outlook is more gloomy than that of other CEOs. BlackRock CEO Larry Fink told investors to keep calm and carry on, calling the economic headwinds currently roiling markets “business as usual” for long-term investors, while Goldman Sachs CEO David Solomon similarly warned there is trouble ahead and urged people to prepare for worsening inflation and an approaching recession.

Fink asked on Jim Cramer’s Mad Money on CNBC, “Is there a risk of a recession?” To be sure, there is. And if we do find ourselves in one, it will be rather moderate. In contrast to Jason Furman, a Harvard economist and economic adviser to the Obama administration, who argues a recession is less likely than Sewing’s 50/50 estimate, Sewing is the chief executive officer of Deutsche Bank.

Jamie Dimon Warns Something Worse Than Recession May Be on the Way
Jamie Dimon Warns Something Worse Than Recession May Be on the Way

According to CNBC’s Market Strategist Survey’s most bullish respondent, Oppenheimer & Co. chief investment strategist John Stoltzfus, the market will not only avoid a recession but also gain 40% from where it is today by the end of 2022.

It was a forecast shared by several Wall Street strategists, such as David Roche, who noted that “things do turn around” at this juncture. However, there are many who share the same concerns as Dimon about “something worse.”

Mike Novogratz, a prominent Bitcoin bull, made one of the most dismal forecasts when he told MarketWatch that the United States was entering a “very quick recession,” with the inevitable result being “the economy is going to collapse.”

Businesses Are Tightening Their Belts

Retailers like Walmart and Target have lowered their profit projections, while other technology firms like Shopify, Apple, Meta, and Microsoft have announced layoffs or reductions in hiring.

For instance, Mark Zuckerberg, CEO of Meta, told staff in a conference call, “If I had to bet, I’d say that this might be one of the worst downturns that we’ve seen in recent history.” Stay tuned with us only on Lee Daily

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