The very harsh forecast of the most influential banker: the US and the rest of the world could fall into recession in six months

Jamie Dimon (REUTERS/Evelyn Hockstein)

Jamie Dimondchief executive of JPMorgan Chase & Co., said “serious” headwinds are likely to push the United States and the rest of the world into a recession by the middle of next year.

Rampant inflation, big interest rate hikes, the Russian invasion of Ukraine and the unknown effects of Federal Reserve policies are some of the indicators of a possible recession, he said in an interview with the business news channel.

“These are very, very serious things that I think will probably push the US and the world, I mean, Europe is already in a recession, and the US is likely to fall into some kind of recession as well in the next six to nine months from now,” Dimon said in an interview with CNBC.

While the US is doing well at the moment, a number of global indicators and issues such as the impact of rising inflation, interest rates rising higher than expected, the effects of quantitative easing by the Federal Reserve, and the war of Russia in Ukraine are sounding alarm bells, Dimon said.

“These are very, very serious things that I think will probably push the US and the world, I mean, Europe is already in a recession, and the US is likely to fall into some kind of recession in the next six to nine months as well.”

“The place where we will probably see more cracking and maybe a little more panic is in the credit markets, and it could be ETFs, it could be a country, it could be something unexpected,” Dimon told CNBC. “If we made a list of all the previous crises, sitting here we would not have predicted where they came from, although I think that this time we could predict that it will probably happen. So, I would be very cautious.”

Dimon noted that the S&P 500 “could have a ways to go” in its decline, and that “it could be another easy 20%.” The index is down almost 25% this year. “The next 20% will be much more painful than the first,” he told CNBC. “Rates that go up another 100 basis points are much more painful than the first 100 because people are not used to it.”

The comments by Dimon, one of the most influential and listened to global financial executives, come as the big US banks are set to present their third-quarter results from Friday.

IMF Managing Director Kristalina Georgieva and World Bank President David Malpass (REUTERS/Mike Theiler/File Photo)
IMF Managing Director Kristalina Georgieva and World Bank President David Malpass (REUTERS/Mike Theiler/File Photo)

So far this year, Wall Street’s benchmark S&P 500 SPX has lost nearly 24%, with all three major US indices trading in bear market territory.

Earlier this year, Dimon called on investors to prepare for an economic “hurricane” after JPMorgan, the largest US investment bank, suspended share buybacks in July after failing to meet Wall Street’s quarterly expectations. Street.

In June, Goldman Sachs had forecast a 30% chance that the US economy would enter a recession over the next year, while Morgan Stanley economists put the odds of a recession over the next 12 months at around 35%.

The President of the World Bank, David Malpass, and the managing director of the International Monetary Fund, Kristalina GeorgievThey also warned on Monday of the growing risk of a global recession and said inflation remained a problem following the Russian invasion of Ukraine.

With information from Bloomberg and Reuters

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