JPMorgan Chase CEO Jamie Dimon says the US banking crisis is not over and “there will be repercussions for years to come.” The executive added that the recent bank failures “have significantly changed market expectations” and the odds of a recession have increased.
JPMorgan CEO Jamie Dimon on the US economy, recession and banking crisis.
Jamie Dimon, Chairman and CEO of JPMorgan Chase, shared his concerns about the US economy, the recession and the banking crisis in his annual letter to shareholders, released last week. The letter followed the recent collapse of several major banks in the US, including Silicon Valley Bank and Signature Bank. Calling the recent bank failures a “banking crisis,” Dimon warned:
The current crisis is not over yet, and even when it is over, there will be repercussions for years to come.
“Recent events are nothing like what happened during the 2008 global financial crisis (which barely affected regional banks),” the JPMorgan chief explained. “At that time, there was enormous leverage in virtually the entire financial system.” Instead, he noted: “This current banking crisis involves far fewer financial players and fewer problems that need to be resolved.”
Commenting on the Federal Reserve’s efforts to curb inflation and future increases, Dimon opined:
If we have higher inflation for longer, the Fed may be forced to raise rates more than people expect despite the recent banking crisis.
In addition, he warned that quantitative tightening (QT) “may have ongoing impacts that could, over time, be another force, pushing long-term rates higher than currently anticipated. This can happen even if we have a mild, or not-so-mild recession, as we saw in the 1970s and 1980s.”
Dimon explained that the bankruptcies of Silicon Valley Bank and Credit Suisse “have significantly changed market expectations, bond prices have rallied dramatically, the stock market has gone down, and the odds of a market recession have increased.” He emphasized:
While this is nothing like 2008, it is unclear when this current crisis will end.
However, the JPMorgan executive insisted that the current economy is “quite good”, but reiterated that there are “storm clouds ahead”.
What do you think about the vision of the CEO of JPMorgan, Jamie Dimon, on the economy and the banking crisis? Let us know in the comments section.
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