Jamie Dimon Says Inflation Could ‘Derail’ Economy and Cause Recession in 2023 as Rising Prices Wipe Out Consumer Savings – JPMorgan Chase (NYSE:JPM)

When JPMorgan Chase & Co JPM chairman Jamie Dimon issues a warning about the economy, people tend to listen. He did just that on CNBC’s “Squawk Box” this Tuesday morning.

What you should know: Dimon was positive about the current state of consumers and businesses, noting that consumers currently have $1.5 trillion in savings and are spending more than in 2021.

The US economy is currently the strongest economy in the world, but there is a problem, he said. The consumer’s relative strength will not last much longer if inflation continues to run hot.

“Inflation is undermining everything I just said, and that $1.5 trillion will run out sometime mid-next year. So if you look ahead, these things could very well derail the economy and cause a mild or hard recession that people are worried about,” Dimon said.

JPMorgan’s CEO told CNBC that interest rates are heading towards 5%. His comments come after the US Federal Reserve hiked interest rates by 0.75% for the fourth straight month in November, bringing its target rate to a range of 3.75% to 4%.

Even if the Fed hikes to 5%, that still may not be enough to fight inflation, Dimon said.

Also Read: Rate Cuts May Not Be Coming Anytime Soon, Says Cramer: ‘Fed Won’t Stop Tightening Until…’

This isn’t the first time JPMorgan’s CEO has issued an economic warning. In June, Dimon said he was preparing the bank for an “economic hurricane,” citing many of the same problems, including inflation and rising interest rates.

At the time, Dimon predicted that the S&P 500 could fall another 20% from its level of around 4,150. The S&P was down more than 1% at 3,954 at the time of Tuesday’s publication.

That SPDR S&P 500 SPYan exchange-traded fund that tracks the underlying S&P 500 index is down about 16.5% year-to-date and about 4% over the last six months.

JPM Price Action: JPMorgan has a 52-week high of $169.81 and a 52-week low of $101.28.

According to Benzinga Pro, the stock is up 0.31% at $131.79 at the time of publication.

Photo: Steve Jurvetson from flickr.