JPMorgan chief Jamie Dimon expects the S&P 500 to correct another 20% in six to nine months from now.
With the Fed raising interest rates aggressively, all eyes are currently on what happens on Wall Street next. On Monday, October 10, JPMorgan CEO Jamie Dimon stated that the US and the global economy have all chances of entering a recession by mid-2023.
However, Jamie Dimon still thinks that the US economy has been doing well so far. He further added that consumers are in better shape compared to the 2008 financial crisis. “But you can’t talk about the economy without talking about stuff in the future – and this is serious stuff,” said Dimon.
Dimon expressed his major concerns surrounding runaway inflation, skyrocketing interest rates, and the unknown effects of monetary tightening. Furthermore, he expressed concerns over the escalating Russia-Ukraine war. Dimon added:
“These are very, very serious things which I think are likely to push the US and the world – I mean, Europe is already in recession – and they’re likely to put the US in some kind of recession six to nine months from now”.
Fed Chairman Jerome Powell has said that he won’t shy away from raising interest rates until inflation comes to 2%. Currently, the inflation in the US is skyrocketing to over 8%. The Federal Reserve is likely to announce another rate hike next month in November. It means that the interest rate would continue to climb well above the existing 3% to 3.25%.
Dimon added that the Federal Reserve is clearly “catching up” with getting the interest rates down. “And, you know, from here, let’s all wish him success and keep our fingers crossed that they managed to slow down the economy enough so that whatever it is, is mild – and it is possible,” he added.
How Long the Recession Will Last?
Dimon said that it’s difficult for him to predict how long the US recession would last. “It can go from very mild to quite hard and a lot will be reliant on what happens with this war. So, I think to guess is hard, be prepared,” he added.
However, one thing that Dimon is sure about is for the market volatility to continue. Dimon said that the S&P 500 could fall another 20% easily from here onwards. Note that the benchmark index is already down by 25% since the beginning of 2022. He added that “the next 20% would be much more painful than the first.”
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