'Soft landing' is unlikely for US economy, says JP Morgan's Jamie Dimon

Jamie Dimon said the Federal Reserve probably can’t cool the red-hot economy without bringing on a recession.

“I don’t know if it could be a soft landing -- I don’t think so, but it might,” the JPMorgan Chase & Co. chief executive officer said at an industry conference in Washington Thursday, adding that the alternatives would be a mild or a severe recession. “In a tough recession, you could expect the market to go down another 20% to 30%.” 

Still, Dimon said he has “total faith and trust” in Fed Chair Jay Powell, and that stagflation is far worse than most of the other potential outcomes as the Fed works to cool price pressures.

The CEO also said his “gut” tells him that the Fed’s benchmark rate will probably have to rise higher than the 4% to 4.5% level many economists are predicting, as inflation persists. Core inflation, excluding food and energy, jumped to a 40-year high of 6.6% in September from a year earlier, data released Thursday showed. 

Dimon said earlier this week that he expects US and global recessions by the middle of next year, citing drivers including rising interest rates, persistent inflation and Russia’s invasion of Ukraine. 

The biggest US bank reports third-quarter results on Friday, kicking off an earnings season in which investors will be focused on how consumers and businesses are navigating through the changing economic environment.