JPMorgan Chase CEO: The U.S. economy may have a hard landing and interest rates may still rise slightly

Special Topic: JPMorgan Chase’s 20th Global China Summit JPMorgan Chase CEO Jamie Dimon said that the U.S. economy may experience a hard landing.
Dimon said in an interview at the JP Morgan Chase 20th Global China Summit in Shanghai: Are we really going to see a hard landing? Of course. How can anyone who has read history say there is no chance? Dimon said the worst outcome for the U.S. economy would be stagflation, in which inflation continues to rise but economic growth slows amid high unemployment.
He said: I see a range of outcomes. The worst outcomes for all of us are stagflation, high interest rates and recession.
That means corporate profits will be down. We\’ll get through this.
I mean. The world has gotten through it. But I just think the likelihood is higher than other people think.
However, he said that even if the U.S. economy slips into recession, consumers are still in good shape.
Dimon noted that the U.S. unemployment rate has been below 4% for about two years, adding that wages, home prices and stock prices have been rising.
Despite this, Dimon stressed that consumer confidence levels are very low.
This appears to be mostly due to inflation… the extra money brought in by COVID-19 has been declining.
It\’s still there. You know. At the bottom 50% it\’s gone.
So I think it\’s normal. Not bad.
The minutes of the Federal Reserve\’s May meeting released on Wednesday showed that policymakers are increasingly worried about inflation. Members of the Federal Open Market Committee (FOMC) said they lack the confidence to loosen monetary policy and cut interest rates.
Dimon said interest rates are still likely to rise slightly.
I think inflation is trickier than people think.
I think the likelihood of this happening is higher than others think. Mainly because the huge fiscal and monetary stimulus packages are still in place. And may still be driving this liquidity.
Is the world ready for higher inflation? Not necessarily, he warned.
According to data from CME\’s FedWatch tool, about half of traders surveyed expect the Fed to cut interest rates by 25 basis points by September.
The Fed had previously expected three 25 basis point interest rate cuts throughout 2024, but only if the market allowed it.
When asked about the prospects and timing of interest rate cuts, Dimon said that although market expectations are quite good.
But they are not always right.
He said: The whole world believes (inflation) will remain at 2%.
Then he said it would rise to 6%. Then he said it would rise to 4%… almost every time it was 100% wrong.
Why do you think now is the right time? Dimon said JPMorgan Chase uses an implicit curve to estimate interest rates, adding: \”I know it\’s going to be wrong.\”
So. Just because it says X. doesn\’t mean it\’s correct.
It\’s always wrong.
Look back at any economic turning point in the past. People thought X. But two years later they were dead wrong.