US economy doing well, but there are risks ahead: JPMorgan CEO Jamie Dimon
JPMorgan CEO Dimon warns against over-optimism on US economy; believes recession is inevitable.
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Business News/ Economy / US economy doing well, but there are risks ahead: JPMorgan CEO Jamie Dimon
JPMorgan Chase CEO Jamie Dimon warned against over-optimism over the economy. As reported by CNBC, Dimon said while the current situation of the US economy is good, it would be a “huge mistake" to believe that it will last for years.
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"Healthy consumer balance sheets and rising wages are supporting the economy for now, but there are risks ahead. To say the consumer is strong today, meaning you are going to have a booming environment for years, is a huge mistake," CNBC reported Dimon saying so.
He said the quantitative tightening by central banks, the Russia-Ukraine war, and huge spending by governments around the world add to his concerns.
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Dimon was speaking at a financial conference in New York.
As CNBC reported, Dimon had warned about an economic downturn last year too, as he expressed the same concerns around central banks and the Ukraine conflict. However, the US economy is in good shape at present despite aggressive rate hikes by the US Fed. Many economists believe the US will avoid a recession.
However, Dimon warned that the US will eventually see a recession.
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"Businesses feel good because they look at their current results. But those things change, and we don’t know what the full effect of all this is going to be 12 or 18 months from now," CNBC quoted Dimon saying.
"If and when you have a recession, which you’re eventually going to have, you’ll have a real normal credit cycle. In a normal credit cycle, something always does worse than expected," Dimon said, as quoted by CNBC.
The US Fed has been hiking rates for over a year now but this has not been able to deal a hard blow to the economy because experts point out that the real Fed Funds Rate still remains below the rates seen in the past rate hike cycles that led to recessions.
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Experts say due to the pandemic-era fiscal stimulus, households received a significant income boost. They have been using these savings to support their spending ever since.
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Disclaimer: The above article is based on a CNBC report. The views and recommendations above are those of individual experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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