The head of the largest U.S. bank said Monday he believes a combination of rising interest rates and geopolitical tensions will drive the U.S. and global economies into recession before the end of 2023.
“These are very, very serious things which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now,” JPMorgan Chase CEO Jamie Dimon said at a Monday event hosted by CNBC.
While Dimon said the U.S. economy remained strong at the moment, he expressed fears it would slide into a recession at some point next year as the Federal Reserve boosts interest rates to fight rising inflation. The prevalence of high prices combined with rising interest rates and looming recession across much of the rest of the world, Dimon warned, make for a “very serious” obstacle for the U.S.
“It can go from very mild to quite hard,” Dimon said of a potential recession, “and a lot will be reliant on what happens with this war” between Russia and Ukraine.
Dimon’s warning comes days before the Labor Department is set to release new inflation data, which could play a significant role in how much further the Fed moves to slow the economy.
The Fed has been raising its baseline interest rate range at a rapid pace since March in a bid to reduce stubbornly high inflation. As the bank boosts borrowing costs, the economy tends to slow as businesses pull back on hiring and consumers reduce their spending. Financial markets have also faltered throughout the year as the Fed tamps down on investment and incentivizes saving.
Fed officials were hopeful they could boost interest rates fast enough to bring inflation down without causing an economic downturn. But top bank leaders, including Fed Chair Jerome Powell, have conceded it will be impossible to reduce inflation without some economic pain, including job losses.