'Serious stuff.' JPMorgan CEO warns U.S. will likely follow Europe into recession next year

Europe is "likely to put the U.S. in some kind of recession six to nine months from now," Jamie Dimon said. 

Updated: October 10, 2022 - 6:02pm

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JPMorgan Chase CEO Jamie Dimon warned Monday the U.S. will likely follow Europe into a recession in six to nine months. 

Dimon, the head of the largest U.S. bank, said that the American economy is presently "still doing well" and that consumers are likely to fare better than during the 2008 recession. 

"But you can't talk about the economy without talking about stuff in the future — and this is serious stuff," Dimon told CNBC

He noted that inflation, the significant increase in interest rates, and Russia's invasion of Ukraine were all factors indicating a recession. 

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

The Federal Reserve raised benchmark interest rates by three-quarters of a percentage point in September, the third consecutive increase of that amount. The Fed has also indicated another hike to 3.25%, up from the current 3%. 

Dimon criticized the Fed, saying it "waited too long and did too little" with inflation hitting a 40-year high, but added that it is "clearly catching up."

"And, you know, from here, let's all wish him success and keep our fingers crossed that they managed to slow down the economy enough so that whatever it is, is mild — and it is possible," Dimon continued. 

The bank CEO said that he didn't know how long a U.S. recession would last, but that market participants should prepare for a range of outcomes.  

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

He did say that there will definitely be volatile markets and warned that that could also occur with disorderly financial conditions. 

Dimon also said that the S&P 500 could fall by "another easy 20%" from current levels, noting that "the next 20% would be much more painful than the first."

World Bank President David Malpass also warned Monday of "a risk and real danger of a world recession next year," The Epoch Times reported.

He noted that in addition to burdensome debt levels in developing countries with depreciating currencies, "inflation is still a major problem for everyone, but especially for the poor."

Malpass also said that poverty levels are soaring worldwide, with a "very concerning" median income reduction of 4%.

IMF Managing Director Kristalina Georgieva also said Monday that there will be at least two consecutive quarters of negative growth in one-third of the world economy, according to the Times.

"The total amount that would be wiped out by the slowdown of the world economy is going to be—between now and 2026—$4 trillion," Georgieva said. "This is the size of Germany's GDP—gone."

She attributed the economic downturn to the COVID-19 pandemic's impact on supply chains and the invasion of Ukraine affecting food and energy prices.

 

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