JPMorgan CEO Jamie Dimon has raised concerns that the U.S. economy might soon face significant challenges, with implications for cryptocurrencies as well. Dimon highlighted the risk that the economy might worsen due to the expiration of the pandemic-era support measures, which have kept it resilient. Contrary to the expectations of a “soft landing” by markets and many experts, Dimon warned of the need to be prepared for a recession. Although economic indicators currently appear favorable, he stressed that this situation could change rapidly.
Dimon: Effects of Pandemic Supports Are Fading
At a recent event organized by Morgan Stanley, Dimon emphasized that the substantial supports received during the pandemic, including government spending and easy monetary policies, are losing their influence. These measures were crucial in maintaining economic stability. However, with their disappearance, a slowdown in economic growth is anticipated.
Dimon pointed out that achieving a “soft landing” without triggering unemployment or a recession while reducing inflation is challenging. Even if such a scenario occurs, it may not feel like a strong recovery. He summarized possible outcomes by stating, “Things might slow down a bit. Prices might rise slightly. Hopefully, just slightly.” Additionally, he remarked that lower immigration levels could negatively impact the labor market and exacerbate economic slowdown.
JPMorgan’s CEO cautioned that economic turning points often go unnoticed by ordinary consumers and business owners. Although current economic conditions appear positive, he warned that this can quickly change and people might miss obvious warning signs. This unseen transition could result in economic contraction being felt more suddenly and severely than expected. Dimon urged paying close attention and being prepared for any eventualities.
Emerging Risks in the Private Credit Market
Another critical concern for Dimon is the private credit market. For those unfamiliar, private credit involves companies borrowing from non-bank entities. Dimon predicts that this market could face significant difficulties in a recession scenario. He cautioned investors not to rush into credit markets at current prices due to these risks.
“I wouldn’t buy credit at current prices,” JPMorgan’s CEO commented, implying that valuations in this area do not match the risks involved.
