JPMorgan chief says US recession is not ‘off the table’ yet

Jamie Dimon believes expectation of a soft landing are too high.

Jamie Dimon said he wouldn’t take the prospect of a recession in the US “off the table,” but that the Federal Reserve should wait before it cuts interest rates.

“The world is pricing in a soft landing, at probably 70-80%,” the JPMorgan Chase & Co. chief executive officer said via video link at the Australian Financial Review Business Summit in Sydney on Tuesday. “I think the chance of a soft landing in the next year or two is half that. The worst case would be stagflation.”

Dimon said economic indicators have been distorted by Covid-19 and he takes them with “a grain of salt,” saying the Fed should wait for more clarity before lowering interest rates.

“They can always cut quickly and dramatically. Their credibility is a bit at stake here,” he said. “Unemployment in the United States is very low at the moment, wages continue to go up.”

Dimon said while the US economy was “kind of booming” currently, the risk of a recession remained.

The comments strike a slightly less optimistic tone from the top banker, who has recently painted a sanguine outlook for world markets — a sharp divergence from his views less than two years ago when central banks first started tightening interest rates. Dimon made headlines for warning in 2022 that a “hurricane” was about to hit the US economy.

Federal Reserve Chair Jerome Powell last week suggested the central bank is getting close to the confidence it needs to start lowering interest rates.

“We’re waiting to become more confident that inflation is moving sustainably at 2%,” Powell said Thursday while answering questions from the Senate Banking Committee. “When we do get that confidence — and we’re not far from it — it’ll be appropriate to begin to dial back the level of restriction.”

‘GOING TO BE A CIRCUS’

On the topic of the US election, Dimon said it was hard to predict a winner between Joe Biden and Donald Trump.

“You’ve got two men: they’re both on the older side, neither can get sick. It’s nerve wracking,” he said. “It’s going to be a circus”

Dimon, said Trump was an “amazing political figure,” but is unpredictable.

“I hope Trump is a much more thoughtful, rational, even speaker when he talks about foreign policy and how he wants to handle that,” Dimon said.

The banker previously expressed support for Republican contender Nikki Haley, who suspended her campaign last week after overwhelming losses in the primaries.