JPMorgan Chase & Co. JPM CEO Jamie Dimon warned Wednesday that escalating U.S.-China trade tensions have significantly increased the risk of a recession after President Donald Trump‘s tariff policies destabilized financial markets.
The Details: During a Fox Business interview, Dimon attributed the growing recession risk to the cascading effects of Trump’s trade policies and China’s retaliatory tariffs.
JPMorgan economists recently raised their recession probability to 60% and anticipate a 0.3% GDP contraction this year.
When asked if he expects a recession, Dimon replied, “I think that’s a likely outcome.”
“A 2,000-point Dow decline creates a self-reinforcing cycle – people see losses in retirement accounts and pensions, leading to spending cuts,” he said.
The 69-year-old CEO noted that markets are “pricing in uncertainty at both macro and company level.” Bond yields are spiking, and initial public offerings, mergers, and acquisitions are stalling amid the volatility.
Though Dimon acknowledged that markets don’t always predict accurately, he said, “This time they’re right in pricing macro/micro-level uncertainties and consumer sentiment impacts.” He also expects “more credit challenges than people have seen in a long time” due to sticky inflation and widening credit spreads.
The SPDR S&P 500 ETF Trust SPY is on the edge of a bear market. It’s down nearly 20% from its recent peak.
Bond prices are also falling sharply. The iShares 20+ Year Treasury Bond ETF TLT is down more than 5% over the past five days.
“Take a deep breath, negotiate some trade deals,” Dimon urged the Trump administration. “It could get worse if we don’t make progress.”
It’s worth noting that Dimon isn’t always spot-on with his predictions. In late 2022, he warned that an economic “hurricane” was coming in mid-2023. It never happened, and Dimon walked back those comments.
“I shouldn’t ever use the word hurricane, but … there were storm clouds,” Dimon said in a 2023 interview.
And in an interview with CNBC last year, Dimon said, “We would be okay” in a recession.
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