Recession is still a real threat, Jamie Dimon and David Solomon warn

microsoft, recession is still a real threat, jamie dimon and david solomon warn

JPMorgan CEO Jamie Dimon. Tom Williams/CQ-Roll Call, Inc via Getty Images

  • Jamie Dimon and David Solomon are still wary of stubborn inflation and a potential recession.
  • The JPMorgan and Goldman Sachs CEOs issued cautious economic outlooks this week.
  • Dimon warned of rate hikes and possible stagflation, while Solomon predicted no cuts this year.

Persistent inflation and a full-blown recession are still firmly on the table, two Wall Street titans have warned.

Jamie Dimon told CNBC on Thursday that sticky inflation is more likely than many people think. The JPMorgan CEO pointed to the tidal wave of fiscal and monetary stimulus since the pandemic, suggesting it may still be fueling liquidity and driving up asset prices.

Dimon said interest rates, which the Federal Reserve has hiked from virtually zero to more than 5% since early 2022, could rise further — and the world was "not really" prepared for that.

Asked if a "hard landing" or recession were still possible, he replied: "Of course. How could anyone who reads history say there's no chance?"

Inflation has cooled from a 40-year high of over 9% in mid-2022 to below 4% in recent months, but remains well above the Fed's 2% target. The US economy grew at an annualized 1.6% in the first quarter, but that was down from 3.4% during the previous three months.

Dimon said the "worst outcome" would be stagflation — a painful combination of elevated inflation, higher rates, and a recession that would hit consumers and pull down corporate profits.

"The world will survive that, but I just think the odds are a little bit higher than other people think," the JPMorgan boss said, describing his outlook as cautious.

No cuts and a real slowdown

David Solomon struck a similar tone at a Boston College event on Wednesday, Bloomberg reported.

The Goldman Sachs CEO predicted there would be "zero" cuts to interest rates this year. Pointing to signs of weakening demand in recent earnings from McDonald's and AutoZone, he cautioned that consumers are being squeezed by higher prices.

"Everything is more expensive," Solomon said. "You're starting to see the consumer, the average American, feel this."

Steeper living costs have raised the chances of a "real and palpable slowdown" compared to six months ago, he added.

Both Dimon and Solomon have been warning against complacency for a while.

The JPMorgan chief said in March that he only sees a 35% to 40% chance of a soft landing. He's repeatedly flagged foreign wars, quantitative tightening, and ballooning government debt as reasons to be cautious.

Solomon also said in March that he was less certain of a soft landing than the market consensus. He noted that overseas conflicts could fuel inflation and curb global growth, and business leaders had told him lower-income consumers were cutting back and some parts of the economy were faltering.

If you enjoyed this story, be sure to follow Business Insider on Microsoft Start.

OTHER NEWS

20 minutes ago

Firebirds Season Comes To An End After 5-4 Overtime Loss To The Bears In Game 6

20 minutes ago

A desperate draw against Slovenia but dreary England continue failing upwards

20 minutes ago

Serbia exit Euros frustrated at what might have been

20 minutes ago

Singaporean households can now redeem $300 CDC vouchers

20 minutes ago

Rivian soars after new joint venture partner Volkswagen invests $5B

20 minutes ago

Orchard Road fatal brawl: Man who punched, kicked victim jailed over 12 months

21 minutes ago

Video: Jessica Alba shows off her fit figure in athleisure wear in Beverly Hills - as her film Trigger Warning leads Netflix top 10

21 minutes ago

Video: Jackie O Henderson gets 'busted on camera' checking out a young guy in Greece during fun European holiday with her best friend Gemma

21 minutes ago

Video: Dramatic court scenes as Jocelyn Nungaray's family hear how she fought with her dying breath 'as migrants raped her'

21 minutes ago

Thousands of DNC protesters expected, raising questions about security, neighborhood impact

24 minutes ago

NYC building’s quirky signs could be painted over with trendy Fendi ads: ‘An architectural crime’

24 minutes ago

Swimmers warned of more life-threatening rip currents along US beaches after multiple deaths

25 minutes ago

Stellantis may cease production at Ellesmere Port and Luton without more EV help

25 minutes ago

‘I don’t think I’ve lost a step’ — Kyle Van Noy ready to build on his career year in Baltimore

25 minutes ago

Today on Pinstripe Alley - 6/25/24

25 minutes ago

Julian Assange plea deal criticised, celebrated by US political world

25 minutes ago

Miami Dolphins not offering Tua Tagovailoa “market value” contract

25 minutes ago

Mobile detection cameras will catch NSW drivers who don’t wear seatbelts from July 1

25 minutes ago

‘The beauty of ordinary life’: Julian Assange’s father hopes freed son finds peace

26 minutes ago

Gareth Southgate hits out at ‘unusual environment’ around England team at Euro 2024

26 minutes ago

NFL, Hallmark team up for a Chiefs Christmas love story

27 minutes ago

Morgan Stanley's Wilson Says the Market Makes Sense

27 minutes ago

Ravens coach John Harbaugh shares his excitement about OT Ronnie Stanley

27 minutes ago

Vikings defensive line rated among 5 worst in NFL

27 minutes ago

Three weeks after a landslide, Wyoming will reopen a highway critical for commuters

27 minutes ago

Lions defensive line ranked top 5 in NFL

27 minutes ago

Build the Ultimate Passive-Income Portfolio With Just $10,000

27 minutes ago

Everything You Need To Know about the Benefits and Uses of Palo Santo

27 minutes ago

Why Labour’s electric car crusade risks crushing Britain’s auto industry

27 minutes ago

Blue Jays’ Guerrero Jr. softens stance on possibly playing for Yankees

27 minutes ago

Commanders move former Super Bowl MVP back into personnel role

27 minutes ago

2 REITs on My Radar as Interest Rates Drop

27 minutes ago

Investors should stay in high-quality names, says Charles Schwab's Liz Ann Sonders

27 minutes ago

Failure to get best version of Phil Foden is England’s fundamental flaw

27 minutes ago

Nobel prize economists warn a Trump win will lead to even higher inflation

27 minutes ago

Declan Rice defiant as England look to press on against Slovenia

27 minutes ago

Video: Netherlands 2-3 Austria: Marcel Sabitzer's winner sees Ralf Rangnick's side edge Euro 2024 five-goal thriller - with beaten Oranje now on a collision course with England in the last 16

27 minutes ago

Former ‘Bob’s Burgers’ Actor Jay Johnston Will Plead Guilty To Federal Charges Over January 6 Capitol Siege – Update

27 minutes ago

Scarlett Johansson Teases “Incredible” ‘Jurassic World 4’ Script & Says She’s Wanted To Join The Franchise For Over 10 Years

27 minutes ago

Manitobans shopping in the U.S.: Experts say it’s not as good a deal as before