JPMorgan Chase CEO Predicts Recession in 6-9 Months?

Jamie Dimon, the CEO of the US¡¯ biggest bank, JPMorgan Chase, yesterday warned that a "very, very serious" mix of headwinds was likely to tip both the U.S. and global economy into recession by the middle of next year.

He said the U.S. economy was "actually still doing well" at present and consumers were likely to be in better shape compared with the 2008 global financial crisis.

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"But you can¡¯t talk about the economy without talking about stuff in the future ¡ª and this is serious stuff," CEO Dimon said at the JPM Techstars conference in London, as per a CNBC report.

Among the indicators ringing alarm bells, JP Morgan¡¯s CEO cited the impact of runaway inflation, interest rates going up more than expected, the unknown effects of quantitative tightening and the Russia-Ukraine war.

"These are very, very serious things which I think are likely to push the U.S. and the world¡ª I mean, Europe is already in recession ¡ª and they¡¯re likely to put the U.S. in some kind of recession six to nine months from now,¡± CEO Dimon said.

His comments come at a time when recession fears are growing day by day, with the US¡¯ central bank, the Federal Reserve, and other major central banks, including India¡¯s RBI, having been raising interest rates to combat soaring inflation.

The Federal Reserve raised the benchmark interest rates by three-quarters of a percentage point (75 bps) last month, making it the third consecutive increase of that size. Fed officials also indicated they would continue hiking rates.

Amidst this, JP Morgan CEO Dimon said that while the Federal Reserve "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 all wish him success and keep our fingers crossed that they manage to slow down the economy enough so that whatever it is, it is mild ¡ª and it is possible," he added.

Also Read: Bank Of England Warns About UK Falling Into Recession This Year

¡°Be Prepared¡±

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CEO Dimon said he couldn¡¯t be sure how long a recession in the U.S. might last, adding that market participants should assess a range of outcomes instead.

He added, "It can go from very mild to quite hard, and a lot will be reliant on what happens in this war. So, I think to guess is hard, be prepared."

Also, Dimon said that one guarantee he could be sure of was volatile markets. He said the S&P 500 benchmark could yet fall by "another easy 20%" from current levels, adding that "the next 20% would be much more painful than the first."

Also Read: India Has Zero Probability Of Slipping Into Recession, Reveals Survey

How JP Morgan Is Preparing

¡°JPMorgan is bracing ourselves and we¡¯re going to be very conservative with our balance sheet,¡± CEO Dimon said at the time. He advised investors to do the same. The bank is scheduled to release third-quarter financial results this Friday. The shares of JP Morgan are down over 30% year to date.

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