Markets will get volatile, maybe the stock market will go down, the Treasury markets will have their own problems,” he said. “The closer you get to it, you will have panic. Trump said in a CNN town hall Wednesday night that a default would be preferable to a result that doesn’t stop the government “spending money like drunken sailors.”Įconomists and congressional leaders on both sides of the aisle say an extended default would hurt the US economy, triggering widespread unemployment, surging interest rates and sparking a global downturn.ĭefaulting on the US debt would be “potentially catastrophic,” Dimon said Thursday. It is just “one more thing he doesn’t know very much about,” Dimon told Bloomberg Television. ![]() Tailwinds from post-pandemic demand had also contributed to economic resilience, he added.ĭimon sharply criticized former President Donald Trump on Thursday, saying the 2024 presidential candidate doesn’t understand the debt ceiling and what is at stake. If the economy were to go into recession in the second half of the year, we could chalk up the more delayed economic downturn to a Fed that was initially behind the curve in fighting inflation along with monetary policy acting with its typical lag,” said Gilbert. But that doesn’t mean we’re out of the woods. Historically, recession typically coincides with that peak, said Barry Gilbert, asset allocation strategist for LPL Financial. What comes next: The United States is approaching one year since inflation peaked at 9.1% in June of 2022. “The bottom line for markets is that with inflation still at 5%, well above the 2% inflation target, and the Fed not cutting rates anytime soon, credit conditions will continue to tighten and, as a result, a recession is coming that could be deeper or longer than the consensus currently expects,” said Torsten Slok, chief economist at Apollo Global Management. A Fed survey, released Monday, confirmed that lenders are stiffening their standards in the wake of the banking collapses - demand for and supply of loans is now close to 2008 levels. The Fed’s own experts predicted in March that “the potential economic effects of the recent banking-sector developments,” would lead to “a mild recession starting later this year.”īank failures can make borrowing harder, which can curb spending and weigh on economic activity. The Federal Reserve has raised rates higher and more quickly than they have in decades, and some say that the ongoing US regional banking crisis is an early warning sign of stress on the system. There are two reasons, noted Paul Christopher, head of investment strategy at Wells Fargo: Higher interest rates and tightening credit. “This has been the most predicted potential recession in memory,” said Federal Reserve Bank of Richmond President Tom Barkin way back in January. Still, the United States managed to avoid a recession. ![]() Things weren’t great last year: Inflation hit a 40-year peak, gas prices were elevated, consumer sentiment plunged and markets fell by 20%. A hard landing is coming, he cautioned, and “it’s just naive not to be open-minded to something really, really bad happening.”įor more than a year CEOs, economists, analysts and their kind have been warning of an imminent economic downturn, The economy, meanwhile, has remained relatively resilient through it all. Given the risks that lie ahead, he told Bloomberg news, “I would take a mild recession happily.”īillionaire investor Stan Druckenmiller didn’t mince his words this week at the Sohn Investment Conference. JPMorgan CEO Jamie Dimon warned on Thursday of great economic danger lurking just over the horizon. That time frame begins less than three weeks from now. A US recession is coming, they say, in the second half of 2023. Economic experts are once again ringing the alarm bells over an imminent downturn.
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