C. B. Morgan ChaseJamie Dimon, chairman and CEO of Enterprise, says a “hard landing” for the US cannot be ruled out.
When CNBC's Sri Jejarajah asked about the possibility of a hard landing, Dimon replied: “Can we see a hard landing? Of course, how can anyone who reads history say there's no chance?”
The CEO was speaking at the JP Morgan Global China Summit in Shanghai.
Dimon said the worst outcome for the US economy would be a “stagflation” scenario, where inflation continues to rise, but growth slows amid rising unemployment.
“I look at the set of outcomes, and again, the worst outcome for all of us is what you call stagflation, rising interest rates, recession. That means corporate profits are going to go down and we're going to get through all of that. I mean, the world has survived that, but I think “The odds are higher than others think.”
However, Dimon said, “the consumer is still in good shape” — even if the economy slides into recession.
He pointed to the unemployment rate, which has remained below 4% for about two years, adding that wages, house prices, and stock prices are rising.
JPMorgan Chase & Co. CEO Jamie Dimon arrives for a Senate Banking, Housing, and Urban Affairs Committee hearing on Capitol Hill on September 22, 2022 in Washington, DC.
Drew Angerer | Getty Images
However, Dimon noted that consumer confidence levels are low. “It seems to be mostly due to inflation. … The extra money from Covid has come down. It's still there, you know, it's kind of gone in the bottom 50%. So I'll call it normal.” , not bad.”
Minutes from the Fed's May meeting released Wednesday showed that policymakers are becoming more concerned about inflation, with Federal Open Market Committee members indicating they lack confidence in easing monetary policy and cutting interest rates.
Timing of Fed cuts
Dimon said interest rates could rise “a little bit.”
“I think inflation is harder than people think. I think the odds are higher than others think, mostly because the massive amount of fiscal monetary stimulus is still in the system, and may still be driving some of that liquidity.”
Is the world ready for higher inflation rates? “Not really,” he warned.
According to the CME FedWatch tool, about half of traders surveyed are pricing in a 25 basis point cut by September. The Fed expects three quarter-percentage cuts throughout 2024, but only if the market allows for it.
Asked about the likelihood and timing of interest rate cuts, Dimon said that although market expectations are “very good, they are not always right.”
“The world said it (inflation) would stay at 2% all that time. Then he said it would rise to 6%, then he said it would rise to four… It was wrong almost 100% every time,” he added. Why do you think this time is appropriate?”
JPMorgan uses the implied curve to estimate interest rates, he said, adding: “I know it will be wrong.
“So just because you say
