- Jamie Dimon sees increased recession odds after March’s banking turmoil.
- The JPMorgan chief says the US financial system faces headwinds from increased inflation, Fed tightening, and conflict in Ukraine.
Jamie Dimon says the chances of a recession have risen after final month’s bout of turmoil within the banking sector.
Though a recession isn’t inevitable, the JPMorgan Chase CEO says the slew of financial institution failures have solely worsened already shaky financial circumstances.
“It is simply one other weight on the dimensions,” Dimon stated in an interview with CNN. “We’re seeing individuals cut back lending a little bit bit, reduce a little bit bit, [and] pull again … It will not essentially power [a] recession, however it’s recessionary.”
The present banking disaster isn’t over but, Dimon says, including that the trade will really feel repercussions for years to return.
Nonetheless, Dimon says the present state of affairs may be very totally different from the Nice Monetary Disaster and never practically as extreme. The disaster in 2008 impacted the world’s largest banks, whereas the issues in March have been concentrated amongst mid-sized regional lenders.
A handful of specialists banks failed in March, sending shockwaves by way of monetary markets. Silicon Valley Financial institution, Signature Financial institution, and Silvergate all failed. In Europe, UBS acquired Credit score Suisse in a deal brokered by Swiss regulators to stave off a disaster of confidence it the nation’s banking system.
Dimon says markets are bracing themselves for 3 main financial dangers: increased inflation, quantitative tightening, and Russia’s ongoing invasion of Ukraine.
“These are fairly sturdy issues,” Dimon added. “For those who take a look at historical past since World Conflict II, we have not [had to] face [conditions] like that.”
Nonetheless, Dimon stays optimistic in regards to the US financial system long-term.
In his annual letter to shareholders this week, the chief govt stated: “We have had 10 years of residence and inventory worth appreciation, and even when we go right into a recession, shoppers would enter it in much better form than in the course of the nice monetary disaster.”