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Jamie Dimon says Americans are on an economic ‘sugar high’—and he’s urging clients to batten down the hatches and prepare for rates to hit 7%


The CEO of America’s largest bank J. P. Morgan, said that while he “hopes and prays there is a soft landing” for the U.S. economy, an uncertain macroeconomic backdrop and a deepening government deficit means “no one knows” where America is headed.

“I would be cautious,” he said. “I think we are feeling pretty good because of all the monetary and fiscal stimulus, but it may be a little more than a sugar high.” He added that deficits “can’t continue forever,” and as policymakers continued to face this alongside an array of other serious issues—including the war in Ukraine and volatility in oil and gas markets—interest rates may need to go up even more than anticipated.

"I ask people in business, are you prepared for something like 7%?" This scenario, he said, would create stress in financial markets.“We urge our clients to be prepared for that kind of stress,” he said.

Dimon isn’t the only market watcher preparing for potential difficulty when it comes to the U.S. economy.

Warren Buffett says, "you find out who's swimming naked when the tide goes out. 7% will be the tide going out. These 200 basis points will be far more painful than the jump from 3% to 5%.”

Deutsche Bank economists put the odds of a U.S. recession “near 100%,” and warned that “avoiding a hard landing would be historically unprecedented.”

Meanwhile, Bank of America said last week that investors were dumping stocks at the fastest pace since the end of 2022 amid concern that higher-for-longer rates would raise the risk of a U.S. recession.

https://finance.yahoo.com/news/jamie-dimon-says-americans-economic-110134964.html