U.S. Recession Risk at 35% Despite Market Volatility, Says JPMorgan CEO

JPMorgan Chase CEO Jamie Dimon recently commented on the US economy, saying that it has "not entered a recession at all" despite the market volatility seen this week.

He stressed that market fluctuations are often an overreaction and can occur for a variety of reasons, some of which are minor.

Dimon’s comments came after a volatile market period triggered by a weaker-than-expected employment report, lackluster earnings from technology activities and a slowdown in the carry trade.

Despite these events, he asserted that the current economic situation did not indicate a recession, although he acknowledged that the probability of a recession was higher than a smooth economic continuation.

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Dimon also highlighted several uncertainties affecting the economic outlook, including geopolitics, the U.S. deficit, quantitative tightening, housing issues and the upcoming election. Although his company increased the probability of a recession to 35% by year-end, Dimon maintained a cautious but calm outlook on day-to-day market fluctuations.

In contrast, Goldman Sachs CEO David Solomon presented a slightly more optimistic view, suggesting that the economy could continue to grow without a recession, though he did not completely rule out that possibility.

Since the beginning of the year, JPMorgan and Goldman Sachs stocks have posted significant gains, reflecting some market confidence in these institutions despite broader economic uncertainty. Dimon noted that while consumer credit losses have normalized since the pandemic, future employment reports will be crucial indicators of consumer health.

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The Federal Reserve is expected to begin cutting interest rates in September, with the first cut expected to be 50 basis points. Dimon expressed confidence in the Fed’s decision-making, though he noted that economic forecasts have often been inaccurate.

Finally, he hinted at his possible departure from JPMorgan, mentioning that the term “is no longer five years” and that the replacement process is underway. He suggested he might serve as chairman for a year or two after stepping down as CEO. When asked about the possibility of working in the Trump administration, Dimon expressed satisfaction with his current role.

Alexander Stefanov