Jamie Dimon has warned of a US recession for most of this year, and now he’s setting a timeline for it.
Last April, the JPMorgan CEO warned that “storm clouds“Has begun to regroup the economy in the form of rising inflation and the Federal Reserve’s aggressive interest rate hike strategy to cool off. These forces are combining to create some serious risks to the US economic outlook, he warned. In June, those storm clouds developed into “storm,” said Dimon, rife with high market volatility and the potential for an escalating recession.
By August, Dimon said he saw a small 10% chance that the US would avoid an economic slowdown, adding that “something worse“More than one recession could eventually pass due to the persistent impact inflation and the Ukraine War are having on the global economy.
Now, Dimon says it’s highly likely that the Fed will continue to raise interest rates next yearCombined with the aftershocks of the pandemic and the aftermath of the Ukraine War, that means a recession is likely as early as next year.
“These are very, very serious things,” Dimon told CNBC in Monday. “They have the potential to send the US into some kind of recession six or nine months from now.”
He added that it is nearly impossible to predict whether it will be a severe and long-term recession or a short-and-moderate recession, forecasting that there could be a number of possible outcomes, ranging from “very mild to fairly hard,” but also warned consumers to steer clear of a prolonged and deep recession.
“To guess is hard, be prepared,” he said.
Prepare for any outcome
While the coming recession may be inevitable, Dimon said the average American may be in better shape than ever to weather the coming recession.
“Right now, the US economy is actually doing well, consumers have money,” he said, pointing out that the consumer spending numbers are still a very encouraging sign that the economy is recovering.
“Even if we go into a recession, [consumers] Dimon said.
US consumer spending has actually still strong in recent months, despite rising inflation and recession fears and helping to quell the recession. But Americans’ willingness to continue spending and boosting economic activity can only go so far, and inflation has forced many to reconsider their vacation spending plan.
“You can’t talk about the economy without talking about things in the future,” Dimon said, referring to how next year’s recession could affect ordinary Americans. “And this is something serious.”
Dimon said that a number of factors will be important in determining when the recession begins, including what happens to the war in Ukraine, and which direction inflation and interest rates will take. Those will also determine how bad the recession is and whether US consumers and businesses can live through it.
Dimon’s only certainty is that the market will be unpredictable for the foreseeable future. “The only guarantee that we have always been consistent is that the markets are volatile,” he said.
Dimon said the S&P 500 could drop another 20% before the year expires and fewer companies will decide to list shares. The S&P 500 has been on a steady decline this year, down 24% since January. Heavy technology Nasdaq The index has performed even worse, having dropped more than 26% in value since January amid bigger recession in the US tech industry this year.
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