Summary:
Jamie Dimon believes a recession is the most likely outcome for the U.S. economy.
He estimates a 35% to 40% chance of a soft landing.
JPMorgan has raised the likelihood of a recession in 2024 to 35%.
The bank cites inflationary pressures and a cooling labor market as contributing factors.
Goldman Sachs also increased its recession forecast from 15% to 25%.
JPMorgan Chase CEO Jamie Dimon has once again expressed his belief that a recession remains the most probable outcome for the U.S. economy. In a recent interview with CNBC, Dimon highlighted various uncertainties including geopolitics, housing, and spending, which he believes are contributing to market instability.
Dimon’s Recession Outlook
Dimon maintains that the odds of achieving a soft landing for the economy are only between 35% to 40%. He stated:
"There’s a lot of uncertainty out there. I’ve always pointed to geopolitics, housing, the deficits, the spending, the quantitative tightening, the elections, all these things cause some consternation in markets."
Despite his cautious stance, he acknowledged that the economy has performed better than anticipated. He pointed out that while credit card defaults are rising, the U.S. is not currently in a recession. However, he expressed skepticism about the Federal Reserve's ability to bring inflation down to its 2% target due to potential future spending pressures. Dimon concluded his remarks with a note of optimism:
"There’s always a large range of outcomes. I’m fully optimistic that if we have a mild recession, even a harder one, we would be okay."
JPMorgan's Revised Recession Forecast
JPMorgan has increased its forecast for the likelihood of a U.S. recession in 2024 to 35%, a significant rise from the previous estimate of 25%. This adjustment reflects growing concerns about the nation’s economic health amid recent market volatility. Bruce Kasman, JPMorgan’s chief global economist, informed clients that the revised forecast is due to changes in inflationary pressures and a cooling labor market.
Additionally, the bank maintains a 45% probability for a recession occurring in the second half of 2025.
JPMorgan is not alone in this outlook; Goldman Sachs has also raised its recession forecast from 15% to 25%, suggesting that a recession could potentially be avoided if the Fed lowers interest rates or purchases bonds.
What are your thoughts on Jamie Dimon’s perspective regarding the U.S. economy and the possibility of a recession? Share your insights in the comments below.
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