JPMorgan CEO Dimon sounds a warning for the economy
Many top economists, such as Harvard's Larry Summers, say the economy is likely to enter a recession this year or next, thanks to the large interest-rate increases from the Federal Reserve.
The economy shrank 1.6% in the first quarter and 0.6% in the second. Consumer prices rose 8.3% in the 12 months through August, and the Fed has lifted interest rates by 3 percentage points since March.
Summers has noted that anytime in the past 60 years when inflation exceeded 4% and unemployment was under 5%, a recession has followed within two years. Unemployment totaled 3.5% in August.
Average Joes Are Worried, Too
It's not just top economists who are worried about the possibility of a recession by the end of next year. A total of 69% of Americans are in the same boat, according to a July survey by personal finance website Bankrate.com.
In an ominous sign, 2 out of 5 Americans (41%) say they are unprepared to handle such an event. And nearly a third (31%) of that cohort is doing nothing to prepare.
On the bright side, three-quarters (74%) of Americans say they are actively taking steps to prepare for an economic downturn.
Nearly half (47%) of Americans say they're cutting discretionary spending, 35% are saving more for emergencies, 30% are paying down credit-card debt, 24% are seeking additional/stable income and 19% are saving more for retirement.
JPMorgan CEO Dimon's Concern
Meanwhile, add JPMorgan Chase Chief Executive Jamie Dimon to the list of those anticipating recession. While the economy is still doing well, raging inflation, soaring interest rates and the Ukraine war present dangers, he told CNBC.
"These are very serious things which … are likely to put the U.S. in some kind of recession six to nine months from now," he said.
Like many others, Dimon says the Fed waited too long to raise rates and thus must go big now, putting the economy at risk.
"Let's keep our fingers crossed that they manage to slow down the economy enough so that whatever it is, is mild — and it is possible," he said.
Looking at the stock market, Dimon said the S&P 500 could slide "another easy 20%" from current levels. The index has dropped 24% year to date.
On the other side of the discussion, Ark Innovation (ARKK) - Get ARK Innovation ETF Report asset manager Cathie Wood has written an open letter to the Federal Reserve, criticizing its monetary policy.
Specifically, the Fed is "making a policy error that will cause deflation," Wood wrote, referring to the Fed's interest rate increases. Wood has argued for months that the economy is suffering from deflation and is already in a recession.
TheStreet SmartsTheStreet's Single Smartest Insight From The DayExclusive newsletter delivered to your inbox daily covering important investing topics pulled from TheStreet's premium content.Cut Through The NoiseYour Personal Financial AdvisorInvesting Cheat SheetLearn more


N.Y. has fourth highest debt in the nation.
Best’s Market Segment Report: Hints of Trouble Resurface for U.S. Commercial Auto Segment After Bright 2021
Advisor News
- What to do when adult children become the client
- Judge rules insurers not liable for Newport Group’s AME Church pension lawsuit
- Why vacation homes are becoming a major blind spot for advisors
- The rise of the ‘gray divorce’ insurance client
- Succession planning: Building the future of your practice
More Advisor NewsAnnuity News
- Best’s Market Segment Report: Global Life/Annuity Reinsurers Remained Poised for Steady Growth
- When technology becomes easy to rent, what still separates life and annuity carriers?
- Legacy Marketing Group® and Malibu Life USA Announce Distribution Partnership for New Fixed Indexed Annuity Platform
- Empower Annuity Insurance Company of America Trademark Application for “EMPOWER WHAT’S NEXT” Filed: Empower Annuity Insurance Company of America
- Industry pushes back on linking ‘financial strength’ to annuity illustrations
More Annuity NewsHealth/Employee Benefits News
Life Insurance News
- AM Best Withdraws Credit Ratings of New Providence Life Insurance Company
- When technology becomes easy to rent, what still separates life and annuity carriers?
- St. Paul & Minnesota Foundation invests $15M to help revive downtown St. Paul
- Legacy Marketing Group® and Malibu Life USA Announce Distribution Partnership for New Fixed Indexed Annuity Platform
- NAIC SUMMER NATIONAL MEETING HIGHLIGHTS COLLABORATION AND ADVANCES PRIORITIES
More Life Insurance News