JP Morgan Chase CEO, Jamie Dimon, stated that the fact that the U.S. economy is doing well right now would be a “huge mistake” to believe that it will last for years. Indeed, he has been warning about the risks to the U.S. economy for some time. He analogized the U.S. economy to be under a “storm cloud.”
He mainly emphasized three major risks that could lead the national economy into a wall. First the use of quantitative tightening (QT); second, the ongoing war in Ukraine; and third, the fact that governments around the world overspend.
On quantitative tightening, Dimon argued that the continuous use of quantitative tightening could potentially lead to a recession because if interest rates continue to be hiked, it will become far more expensive for businesses to borrow money and invest, which could lead to slower economic growth. As a matter of fact, the economy has been already slowing down.
On the war in Ukraine, Dimon stated that the war has caused the prices of energy to skyrocket, which subsequently disrupted global supply chains.
On government spending, Dimon stated that governments all across the world have been spending like “drunk sailors.” Indeed, governments around the world have dramatically increased their budget spending, which has caused a worldwide surge in inflation.
Dimon has said that he believes a recession is "a very real possibility" in the next few years. However, he also said that the economy is "very resilient" and that it could avoid a recession if the risks are managed carefully. Mr. Dimon made many statements about the national economy over the last few months.
In April 2023, he said that the economy was "holding up pretty well, all things considered." However, he also said that "threatening clouds are still here."
In June 2023, he said that it would be a “huge mistake” to believe that the economy will boom for years. He cited the risks of QT, the war in Ukraine, and government spending as reasons for his concern.
In September 2023, he said that the economy is "doing well" but that there are "storm clouds" on the horizon. He reiterated his concerns about QT, the war in Ukraine, and government spending.
Despite stating that the economy is very resilient, the CEO of JP Morgan emphasized that the risks are real and that businesses and consumers should be prepared for a downturn.
It is important to note that Jamie Dimon is not the only one who is warning about the possibility of a recession. Many other economists and financial experts are also concerned about the risks to the economy. So far, the likelihood of a soft landing seems more plausible than a recession but since inflation rate surged for the second consecutive time since July 2023, the happenstance of a recession remains an option.