CEO David Solomon sees 'good chance' of US recession in 2023

JPMorgan Chase CEO Jamie Dimon last week said the U.S. is likely headed for a recession within the next six to nine months as a result of steeper interest rates and the war in Ukraine. 

“These are very, very serious things which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now,” Dimon said during an interview with CNBC last Monday.

He warned the S&P 500 could tumble another 20% as a result of such a downturn. 

There is a growing expectation on Wall Street that the Fed will trigger an economic downturn after it embarked on one of the fastest courses in history to raise borrowing costs and slow the economy.

Officials in September approved a third consecutive 75-basis-point rate hike, lifting the federal funds rate to a range of 3% to 3.25% – near restrictive levels – and indicated that more super-sized increases are coming.

Economic growth already contracted in the first two quarters of the year, with gross domestic product – the broadest measure of goods and services produced in a nation – shrinking by 1.6% in the winter and 0.6% in the spring, signaling the start of a technical recession.

Fed Chair Jerome Powell has all but conceded the central bank will tip the economy into a recession with its rapid rate hikes, warning that higher rates will cause economic “pain.”

“The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive or restrictive for longer,” Powell told reporters in Washington in September. “Nonetheless, we’re committed to getting inflation back down to 2%. We think a failure to restore price stability would mean far greater pain.”

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