JPMorgan CEO Jamie Dimon Warns of Higher Interest Rates and Recession – Jamie Dimon, the CEO of JPMorgan Chase, has expressed concerns about potential negative developments in the U.S. economy during the 2023 New York Times Dealbook Summit and the Global Investment Summit in London organized by British Prime Minister Rishi Sunak.
Elaborating on his recent warning of “the most dangerous time the world has seen in decades,” Dimon said at the Dealbook Summit on Wednesday: “If you look at history and you open a newspaper of any month, any year, of course, there’s always tough stuff going on — wars, depressions, recessions” He explained that the current situation, including the war in Ukraine, the huge humanitarian crisis, and the nuclear blackmail, is affecting all.
Including oil and gas, migration, food costs, as well as international military and economic relationships. “That’s pretty tough and that’s before the terrorist attack in Israel,” Dimon opined. Noting that these events are “dangerous,” the JPMorgan executive emphasized: “If you look at the history of battles like this, they’re unpredictable. You don’t know the full effect.”
He continued: “I look at a lot of things out there, both dangerous and inflationary. So I just say: be prepared. The rates may go up — both the short rate and the 10-year rate, and be prepared that might lead to recession.” Commenting on the current state of the economy, Dimon described: “When people look at the current economy and things are going good.”
“We’ve had a little bit of drugs injected directly into our system called ‘fiscal stimulation,’ the largest we’ve ever had in peacetime. But they are drugs running through the system, and they create this kind of sugar high, and we’re in a sugar high.” The JPMorgan boss further shared: “Corporate profits are up because people are spending a lot of money. Where do they get the money? The government gave it to them.”
“Well, of course, profits are up. So, I’m quite cautious about the economy.” Dimon further asserted that the world isn’t ready for a 7% interest rate. During the Global Investment Summit organized by Prime Minister Sunak, Dimon cautioned about the possibility of unfavorable economic developments. Cautioning that the world is now facing a “dangerous cocktail” of risks that could prove “explosive” for the global economy.
The JPMorgan CEO said: “You can’t sit here and say that something bad may not happen. I’m not trying to scare people. I’m more in the category that something could go wrong.” He cautioned that inflation is likely to persist at elevated levels for longer. “We’re on this sugar high and I’m not saying this ends in a depression [but] I think there’s more inflationary forces out there.”
“There’s a higher chance that rates go higher, inflation doesn’t go away, and all these things cause more problems of some sort,” the executive detailed. Earlier in the current month, Dimon expressed his view that the Federal Reserve might increase interest rates further, stating: “I suspect that they may not be done.” He added: “I think there’s a chance that inflation is just a little stickier than people think and their fiscal and monetary stimulus in the last several years is more than people think. Unemployment is very low.”
In September, Dimon had issued a warning about the Federal Reserve possibly raising interest rates to 7%, a move that could result in stagflation for the U.S. economy. Following that, in October, he highlighted two “extraordinary” storm clouds affecting the U.S. economy. “One is the fiscal money being spent is so big, the largest in peacetime ever — America and kind of around the world — with very high deficits and QT we’ve never had,” the executive detailed, clarifying: “The biggest storm cloud is geopolitical.”