JPMorgan Chase CEO Jamie Dimon said inflation could tip the U.S. economy into recession next yr.
While consumers and firms are currently in fine condition, that will not last for much longer, Dimon said Tuesday on CNBC’s “Squawk Box.” Consumers have $1.5 trillion in excess savings from Covid pandemic stimulus programs and are spending 10% greater than in 2021, he said.
“Inflation is eroding all the pieces I just said, and that trillion and a half dollars will run out sometime midyear next yr,” Dimon said. “If you’re searching forward, those things may thoroughly derail the economy and cause a light or hard recession that folks worry about.”
The veteran JPMorgan CEO began to lift concerns concerning the economy earlier this yr. In June, he said he was preparing his bank for an economic hurricane on the horizon, partly due to the Federal Reserve’s reversal of bond-buying programs and the Ukraine war.
Adding to pressure for borrowers, the Fed’s benchmark rate of interest is headed to five%, Dimon noted Tuesday. That rate “is probably not sufficient” to subdue inflation, he added.
Through the wide-ranging interview, Dimon called cryptocurrencies “an entire sideshow” that’s rife with criminality and said globalization was within the technique of being partly reversed as supply chains are restructured amid heightened geopolitical tensions.
Dimon, 66, has led the Latest York-based bank since 2006. Under his leadership, JPMorgan became the most important U.S. bank by assets because it weathered the 2008 financial crisis, its aftermath and the 2020 coronavirus pandemic.
While the prospects for the economy could also be dimming, the banking industry will find a way to face up to a cycle of upper loan defaults, he said. That is partly due to the recent capital requirements imposed on the industry after the 2008 crisis.
“The American banking system is unbelievably sound in one million alternative ways,” Dimon said. “Our capital cup runneth over.”
