JPMorgan’s chief executive has warned that the current high inflation rates date back to the 1970s, when unemployment was widespread.
Jamie Dimon warned that rate cuts were not guaranteed due to rising prices, stagnant growth and huge government spending.
He mirrored the current financial outlook in the 1970s, when staggering inflation and an energy crisis hit the United States.
Mr. Dimon, who is considered by many to be a cautious person on Wall Street, said a recession is possible.
JPMorgan CEO warns high inflation reflects 1970s
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His comments echoed statements from other economists and companies, including Wells Fargo, that say a recession is possible this year.
In an interview with Fox Business Network, Dimon shared his thoughts on the possibility of lower interest rates: I think it’s due to fiscal spending and other factors.
“I look at a lot of things, but forget about the economic model. The $2 trillion budget deficit, the infrastructure and IRA legislation, the green economy, the remilitarization of the world, the restructuring of trade are all It’s inflation.
“It seems a little like the 1970s to me.
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Mr. Dimon is seen by many as a cautious voice on Wall Street.
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“So I think people may need to be prepared for inflation to drop but then rebound around $3.” [per cent] And maybe a little jump could change those implicit curves. Are people ready for that? I don’t really understand. “
Deutsche Bank made a similar prediction in October, harking back to the era of high unemployment 50 years ago known as the “Great Inflation.”
Two major oil production shocks caused by wars in the Middle East caused prices to soar.
The “surprising number of similarities” is primarily based on inflation rates. It hit a high of 9.1% in June 2022, but has fallen to 3.1% as of November 2023.
As a result of inflation, interest rates have risen from near zero to between 5.25% and 5.5%, the highest in more than 20 years.
Dimon also noted that additional coronavirus funding will soon be exhausted.
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Dimon also noted that additional coronavirus economic relief that had kept consumers afloat is starting to wear off.
“Credit is normalizing but still depressed. Stock prices are rising. Consumers are in good shape. But the extra money they got during the pandemic, the trillions of dollars, is now gone. It’s starting to…it’s going to bottom out this year.
“The government is running a huge deficit and that will affect the market. But I’m a little skeptical of this kind of Goldilocks scenario.
“It could be [a] A mild recession or a deep recession,” the CEO added.
“I think they did the right thing in terms of rate hikes. I think they were a little slow. I think they’re doing the right thing in just waiting and seeing… to see the full effect of it. It will take some time… but there is a good chance that all these factors will be enough to push us into a recession rather than a soft landing.”