Jamie Dimon rocked markets last year by comparing the coming recession to a “hurricane.” Now he says it’s just some ‘storm clouds’

At an AllianceBernstein-sponsored annual conference in late May, JPMorgan Chase CEO Jamie Dimon told a group of investors that he was preparing for the worst and feared the US economy could experience an economic “hurricane.”

“I said there were storm clouds, big storm clouds. It’s a hurricane,” Dimon said. “Right now it’s kind of sunny, things are going well, everyone thinks the Fed can handle it. This hurricane is right out there on the road, coming our way. We don’t know if it’s a small or Superstorm Sandy. You better brace yourself. JPMorgan is arming itself.”

News of Dimon’s gloomy forecast broke on June 1 as the S&P 500 traded above 4,100. Over the next two weeks, the blue chip index fell 12% to below 3,700. While one man’s words rarely move markets and it’s unlikely even Dimon — often credited as the voice of the financial industry — could have caused such a decline, the outlook clearly didn’t help. And now Dimon says he regrets even using the word “hurricane.”

“I should never have used the word ‘hurricane,'” he told FOX Business on Tuesday. “What I said was that there were storm clouds that might moderate, and people were like, ‘Oh, he doesn’t think it’s a big deal.’ So I said, ‘No, those storm clouds could be a hurricane.’”

Back in April, ahead of his hurricane comments at the AllianceBernstein event, Dimon first told analysts on a conference call that he saw “storm clouds” on the horizon. Then, in an interview with Bloomberg in May, the CEO said the economy had about a 33% chance of a “soft landing” and a 33% chance of a “mild recession,” adding that “the chance is there.” that this could be a lot harder than that.” At an industry conference that same month, he even warned that stocks could fall another 30% in a severe recession scenario.

But now Dimon says his point was that the “storm clouds” on the horizon “could be nothing,” or they could be bad.

“I think we should understand that I’m not predicting one or the other, I’m just saying be a little prepared for both,” he said.

There’s always uncertainty in the economy and markets, Dimon said Tuesday, but it’s getting worse these days because of the Ukraine war, high energy and food prices, rising interest rates and quantitative tightening — or the Federal Reserve’s attempt to shut down the Federal Reserve reduce – “increased”. extent of its balance sheet.

That’s why JPMorgan Chase is gearing up for “storm clouds,” but Dimon made it clear that this isn’t a new trend. The CEO added that he always makes sure his company can withstand any economic environment and serve customers.

“We’ve always done that,” he says. “So when I say I’m prepared, yes we are prepared for a hurricane. But we were prepared before I spoke about it. We were prepared before ’07 and the Great Financial Crisis because I know bad things happen – and very often they happen in ways you don’t expect.”

Dimon said there’s also a chance that all of the uncertainties threatening the economy, from inflation to geopolitical tensions, will be resolved this year, leaving the economy with a “mild Goldilocks recession.”

“But maybe not,” he added. “I’m still on the cautious side on this one.”

Still, Dimon, who guided JPMorgan Chase through the Great Financial Crisis, still has faith in the US economy. He noted that consumers continue to spend and have more money in their checking accounts than they did before the pandemic. He also argued that most companies are in “good shape” despite the rise in inflation.

When asked about the biggest lesson he’s learned from his time in the financial industry in navigating boom-and-bust dynamics, the CEO said he’s learned “how resilient the country is.”

“If you go back every decade, back to 1900, the decade after that it was bigger — and that includes World War I and World War II,” Dimon said. “The resiliency of the system is incredible. It’s the sort of thing Warren Buffett is referring to. It doesn’t go backwards, it might stop sometimes, but it keeps growing and renewing itself.”

“Never bet against America” ​​has always been a key theme of billionaire investor Warren Buffett’s investment philosophy. At 92, Buffett is still chairman and CEO of $692 billion Berkshire Hathaway, and throughout his career he has emphasized that the American economy — and with it the stock market — will continue to grow.

“For 240 years, betting against America has been a terrible mistake, and now is not the time to start,” Buffett wrote in his 2016 annual letter to Berkshire shareholders. “America’s golden goose of commerce and innovation will continue to lay more and bigger eggs. America’s Social Security promises will be kept and perhaps made more generous. And yes, America’s children will live far better than their parents.”

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