JPMorgan Chase (JPM) CEO Jamie Dimon said the U.S. economy is “not in a recession at all” and urged calm over this week’s market volatility, but he still sees the odds of that happening as more likely.
“Markets are volatile,” Dimon said in an interview with CNBC. “I think people overreact a little bit to the day-to-day volatility of the market. Sometimes it’s for good reason. Sometimes it’s almost irrational.” [for] without reason.”
On Monday, a weaker-than-expected jobs report, coupled with some tepid tech earnings and the unwinding of the so-called carry trade, produced the most volatile day in the stock market since the start of the pandemic.
Markets lost more ground on Wednesday as major stock averages continued to recover from Monday’s rout.
When asked by CNBC whether the U.S. economy was already in recession, Dimon said, “Absolutely not.” But Dimon made clear that he believes the odds of a recession outweigh the odds of a soft landing.
He also pointed to uncertainty on topics ranging from geopolitics and the U.S. deficit to quantitative tightening, housing and elections.
Dimon became the latest Wall Street chief economist to downplay concerns that this week’s volatility reflects an unhealthy economy.
On Tuesday, Goldman Sachs (GS) CEO David Solomon painted a more optimistic picture.
“My view is that the best chance, as we look ahead, is that the economy will slowly pick up and we probably won’t have a recession,” Solomon said in an interview with Bloomberg.
On Sunday, Goldman economists raised the firm’s forecast for a U.S. recession in the next 12 months to 25% from 15%.
“But the probability is not zero. It’s never zero. I would say it’s a little higher than we would normally expect,” Solomon added.
So far this year, JPMorgan and Goldman shares are up more than 18% and 23%, respectively. A broader index tracking U.S. banks (^BKX) is up 9% over the same period.
While Dimon’s views on recession haven’t gone up, he acknowledged that JPMorgan’s consumer credit losses have increased or “normalized” from record lows seen during the pandemic.
“That doesn’t mean things can’t get worse here,” he added, pointing to future jobs reports as the key place to watch for signs of U.S. consumer weakness.
The Federal Reserve is now expected to begin cutting interest rates in September, with markets expecting the first cut to be 50 basis points, according to the CME FedWatch tool.
Asked if that would affect the economy, Dimon said, “I don’t think so.” He also doesn’t think it would spark fears of stagflation.
“If they do, I’m sure they have a good reason to do so, and I’ll rely on their instincts. So I expect they’ll do it soon.”
He also noted that “all the predictions were wrong too, so you always have to keep that in mind.”
Dimon, 68, made clear earlier this year that he saw an end to his time as chairman of the largest U.S. bank.
He told investors in May that his timetable for exit was “not five years anymore” and that the succession process was “on track,” highlighting key deputies seen as front-runners to take over his job.
He offered some new hints about that process on Wednesday, but indicated that he “maybe stay on as chairman for a year or two” after stepping down as CEO.
Asked if he would serve in former President Donald Trump’s cabinet if invited, Dimon said, “I’m very happy doing what I’m doing.”
David Hollerith is a senior reporter at Yahoo Finance covering banking, cryptocurrency, and other financial topics.
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