JPMorgan's chief executive Jamie Dimon has predicted that the US economy will probably be tipped into recession in six to nine months.
The boss of the largest bank in America cited a plethora of factors that indicated this timeline, in an interview for CNBC at the JPM Techstars conference in London on 10 October.
Dimon suggested that runaway inflation, the Federal Reserve’s aggressive strategy of interest rate hikes to bring it down, unknown effects of quantitative easing and the consequences of the Ukraine crisis are all feeding into the volatile situation.
“These are very, very serious things which I think are likely to push the US and the world - I mean, Europe is already in recession - and they’re likely to put the US in some kind of recession six to nine months from now,” Dimon said.
According to the American billionaire businessman and banker, it is nearly impossible to predict whether it would be a severe and long recession or a short and moderate one. Outcomes could range from “very mild to quite hard”, he said, adding, “To guess is hard; be prepared.”
10 October 2022, 13:07 GMT
Dimon sought to allay fears somewhat, saying that US consumers were possibly in better shape to tackle the almost unavoidable recession than they were at the time of the 2008 global financial crisis.
“Right now, the US economy is actually still doing well; consumers have money,” he said, emphasizing that consumer spending numbers were encouraging.
“But you can’t talk about the economy without talking about stuff in the future - and this is serious stuff,” warned the JPMorgan boss, adding that the only "guarantee we’ve been consistent on is volatile markets."
The US Federal Reserve and other major central banks have been raising interest rates to tackle soaring inflation. Benchmark interest rates were raised by three-quarters of a percentage point in September, with officials indicating they would continue raising rates. In late September, Federal Reserve vice-chairwoman Lael Brainard said that US inflation, which grew 6.2 percent during the year to August, which was slightly down from 6.3 percent in the 12 months to July, remained at a "very high" level.
Although the Fed is trying to tame inflation with its rate rises, the increases have, in turn, led to higher borrowing costs across the economy.
In Dimon’s opinion, the Fed, "waited too long and did too little".
"But they’re clearly catching up," he said, adding: "They’re clearly motivated to catch up… And, you know, from here, let’s all wish them 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."