JPMorgan chief Jamie Dimon gave another dire warning about the Ukraine war’s potential long-term impact on the global economy on Wednesday – cautioning that an escalation in the brutal Russian invasion is a potential “disaster” that could cause an economic slowdown.
Dimon indicated that he is more concerned about possible escalation in the Ukraine war than he has about the mounting fears of a recession as the Federal Reserve moves to hike interest rates to curb inflation.
“Basically, the Cold War is back,” Dimon said during an interview with Bloomberg. “I think the whole world learned something that we always knew – that national security is always the most important thing, but it kind of recedes in the background when we’re all doing well.”
Dimon asserted there was a “chance” that the Russia-Ukraine war could last for “years” – an outcome that he warned would “completely rattle global energy markets, wheat markets, commodity markets.”
The bank boss called on the Biden administration and Western allies to take immediate steps to boost a “precarious” global energy market – with a focus on ensuring that European nations that have long relied on Russian energy have viable alternatives available.
“The Cold War is back,” Dimon repeated. “The allies have to coalesce and not just for military purposes but for global, economic, strategic investment purposes so that we’ve got a safe world. If we don’t do that, Ukraine, you could see that all around the world. You could see forms of chaos.”
Dimon’s interview with the outlet surfaced hours before the Fed was set to announce the next phase in its an effort to fight inflation. The central bank is projected to tee up a half-percentage-point hike in its benchmark interest rate and unveil its plan to trim down its nearly $9 trillion balance sheet.
Dimon said he felt the Fed was “a little late” in taking action on inflation, which hit a four-decade high of 8.5% in March.
“Remember, two years ago we had 15% unemployment and no vaccine. So I think people should take a deep breath, give them a chance and I think the sooner they move, the better,” Dimon said.
But even as Dimon outlined his view of the odds of a recession — there’s a 33% chance America has a “soft landing,” a 33% chance of a mild recession and 33% chance of a severe recession — he moderated his tone and added the economy is currently “very strong” and that consumers are in “great shape.”
Dimon’s comments come less than a month after JPMorgan, America’s largest bank, reported disappointing earnings that were 42% lower than the same period in 2021. At the time Dimon warned in a statement there would be “significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine.”
US inflation is running at 8.5%, according to the most recent read from the feds, its highest level since 1981 and a threat to everyday Americans when it comes to rising prices at the cash register — and to corporations, which are seeing their profit margins threatened.