JPMorgan ChaseJamie Dimon, chairman and CEO of, says the U.S. economy could face a “hard landing.”
When asked by CNBC’s Sri Jegarajah about the prospect of a hard landing, Dimon replied: “Could we actually see one?” Of course, how could anyone who reads history say there is no chance?”
The CEO spoke at the JPMorgan Global China Summit in Shanghai.
Dimon said the worst outcome for the U.S. economy will be a “stagflation” scenario, in which inflation continues to rise but growth slows amid high unemployment.
“When I look at the range of outcomes, the worst outcome for all of us is what you call stagflation, higher interest rates, recession. That means corporate profits will fall and we’ll get through this. I mean, that. “The world survived that, but I just think the odds were higher than other people think.”
However, he said that “the consumer is still in good shape” – even if the economy slips into recession.
He pointed to the unemployment rate, which has been below 4% for about two years, adding that wages, property prices and stock prices have increased.
JPMorgan Chase & Co CEO Jamie Dimon arrives at a Senate Committee on Banking, Housing and Urban Affairs hearing on Capitol Hill on September 22, 2022 in Washington, DC.
Drew Angerer | Getty Images
However, Dimon noted that consumer confidence is low. “It seems to be mainly due to inflation… The extra money from Covid has gone down. It’s still there, you know, for the bottom 50% it’s kind of gone. So I’ll call it normal, not bad.”
Minutes from the Fed’s May meeting released on Wednesday showed policymakers becoming increasingly concerned about inflation. Members of the Federal Open Market Committee said they lacked confidence to ease monetary policy and cut interest rates.
Timing of Fed interest rate cuts
Dimon said interest rates could still rise “a little bit.”
“I think inflation is more persistent than people think. I think the odds are higher than other people think, especially because the huge fiscal stimulus is still in the system and may still be driving some of that liquidity.”
Is the world prepared for higher inflation? “Not really,” he warned.
About half of traders surveyed are pricing in a 25 basis point cut by September, according to the CME FedWatch tool. The Fed has forecast cuts of three-quarters of a percent in 2024, but only if the market allows it.
When asked about the prospects and timing of rate cuts, Dimon said that while market expectations are “pretty good,” they are not always correct.
“The world said [inflation] I wanted to stay at 2% the whole time. Then it says it will go up to 6%, then it says it will go up to four… It was 100% wrong almost every time. Why do you think this timing is right?”
JPMorgan uses the implied curve to estimate interest rates, he said, adding: “I know it will be wrong.”
“Just because it says X doesn’t mean it’s right. It’s always wrong. If you go back to any turning point in the economy, people thought X, and then two years later they were completely wrong,” he said.
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2024-05-23 05:35:08
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