JPMorgan CEO Still Worried About U.S. Recession
The CEO of America’s largest bank warns that the risk of a U.S. recession remains high due to political, budgetary, and interest rate uncertainties.
On August 7th, JPMorgan Chase CEO Jamie Dimon stated that he believes the likelihood of a “soft landing” for the U.S. economy is only 35-40%. This suggests that the probability of a recession is higher.
In February, Dimon had already noted that the market was too optimistic about recession risks. When asked yesterday whether his outlook had changed, Dimon said his forecast “remains the same.”
“There are still many uncertainties—geopolitics, housing, budget deficits, federal spending, monetary tightening, and the election. All these factors are going to scare the market,” he explained on CNBC. Last month, the world’s largest economy added just 114,000 new jobs, down 47% and 36% from May and June, respectively. The unemployment rate also increased from 4.1% to 4.3%, mainly because more people began looking for work again. While this jobs report doesn’t indicate an imminent recession for the U.S. economy, it surprised many. Economists are beginning to worry about signs of cracks in the world’s largest economy.
JPMorgan is currently the largest bank in the U.S. by asset size. Dimon is also a significant figure on Wall Street. In 2022, he warned that the U.S. would face an “economic hurricane” as the Federal Reserve’s interest rate hikes could push the country into a recession. However, the economy subsequently performed better than expected.
Yesterday, Dimon expressed some skepticism about the Fed’s ability to bring inflation down to its 2% target, citing upcoming spending on military and green economy initiatives. Nevertheless, he also emphasized that despite the rising number of credit card defaults, the U.S. is not currently in a recession.
“There are always many scenarios that could play out. But I’m optimistic that even if the U.S. economy enters a recession, whether severe or mild, we’ll be okay. Of course, I deeply sympathize with those who lose their jobs. Nobody wants a hard landing,” he said.
Dimon also advised investors to remain calm following the financial market volatility earlier this week. “The market is always in motion. I think people overreact to the daily fluctuations of the market. Sometimes the ups and downs are justified. But often, there’s no basis for it at all,” he said.
Dimon is the latest Wall Street figure to try to ease concerns that this week’s financial market volatility reflects an unhealthy economy. On August 6th, Goldman Sachs CEO David Solomon told Bloomberg that “looking ahead, the economy will continue to grow steadily and will not enter a recession.” However, Goldman Sachs economists have raised the probability of a U.S. recession in the next 12 months to 25%, up from the previous forecast of 15%.
