Jamie Dimon Signaled Potential Recession in The U.S.

An American billionaire businessman and banker, Jamie Dimon warned Americans and shared his thoughts about a possible recession in next year.

Mr. Dimon pointed to consumer spending climbing 10% over the past year and 40% above pre pandemic levels as a sign the U.S. economy is “the strongest in the world today,” with Americans holding on to $1.5 Trillion in their bank accounts.

Jamie Dimon’s Outlook

Mr. Dimon has been the chairman and chief executive officer of JPMorgan Chase – the largest of the big four American banks – since 2005. He was previously on the board of directors of the Federal Reserve Bank of New York.

He looks at world events for signals of how hard a potential recession in the U.S. may be. Not only him, many on Wall Street also predicted the U.S. will tip into recession early in 2023.

In his recent interview, he said of current geopolitical risk “It’s turbulent.” “It’s like anything can go wrong,” he added.

The Risk Factors

The CEO of the largest bank in America pointed out a range of risk factors. He included Russia’s war in Ukraine, fiscal turmoil in emerging markets, U.S. competition with China and increasing oil and food prices. All these things will determine the economic outlook, according to him.

He added the Federal Reserve was likely behind the curve in adjusting policy to battle rising prices. “Look I think the Fed, you know, anyone can look and say you were late. I hate second guessing people, because I make mistakes all the time,” Mr. Dimon said. “But now they’ve kind of caught up.”

However, earlier in this week Jerome Powell, FED Chair suggested there could be a slowdown in the pace of interest rate hikes, still Mr. Dimon believes there may be room for more necessary action after that.”They may have to do a bit more after that, which will obviously probably catch people by surprise,” Mr. Dimon said.

He thinks that the FED will ultimately dominate in its efforts to include record high inflation and get it closer to its preferred level of 2%. “I think they’re going to win. I don’t think it’s going on for 10 years. The only question is how long it takes to get it down to a number that people think you’ve kind of won,” as he stated.

All the statements or outlooks related to economic climate and inflation are not certain. As during an event at the Brookings Institutions in the previous week, FED Chair Jerome Powell reiterated that it’s hard to know how long inflation will remain high: “The truth is that the path ahead for inflation remains highly uncertain.”