JPMorgan Chase Chief Executive Jamie Dimon has projected that the US economy is likely to enter a recession next year and warned that the slowdown threatens to trigger “panic” in credit markets and wipe out another 20% of the value of US stocks.
The comments by Dimon, whose economic pronouncements are closely watched by investors, followed similar projections made last month by billionaire Ken Griffin. They point to a growing consensus among top Wall Street figures about the likelihood of a US recession.
In an interview with CNBC on Monday, Dimon cited rising interest rates and Russia’s invasion of Ukraine as factors fueling the risk of a slowdown in 2023.
“These are very, very serious things that I think are likely to put pressure on the US and the world – I mean Europe is already in a recession – and will probably put the US in some kind of recession six to nine months from now,” Dimon reportedly said. , as mentioned.
Dimon said the first signs of distress were evident in the financial system — pointing to the depressed market for initial public offerings and high-yield debt deals — and predicted the troubles would soon spread to other areas.
“The likely place you’re going to see more cracks and maybe a little more panic is in the credit markets,” he said.
In June, Dimon had warned of an economic “hurricane”, and on Monday he again encouraged investors to be “very, very cautious”. He added, “If you need money, go create it.”
Asked where he saw the S&P 500 stock index fund, which has dropped more than 20% this year, Dimon said he still “may have a ways to go” and “it could easily be another 20%.”
“I think the next 20% is going to be a lot more painful than the first 100 basis points. Rates going up another 100 basis points are a lot more painful than the first 100, because people aren’t used to it.”
JPMorgan, the largest US bank by assets, will release the results on Friday (14). Analysts are predicting that, like other big banks, he will set aside more than $4 billion to cover potential losses from bad loans, in a sign of growing pessimism around the US economy.
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