JPMorgan Chase CEO Jamie Dimon warns of "mild recession" in 2023

[00:00:00] Speaker 1: The Federal Reserve is weighing whether or not to raise interest rates again before the end of the year as it fights to bring down inflation. If we look at the numbers, consumer prices have slightly gone down over the past six months. The unemployment rate has ticked up just a little, which is exactly what the Fed is trying to do by tightening monetary policy. Gas prices are also now lower than before Russia invaded Ukraine, which caused them to spike. Despite this positive economic data, J.P. Morgan Chase CEO Jamie Dimon tells CBS News' Margaret Brennan the U.S. could [00:00:32] Speaker 2: still see a mild recession next year. The Fed was late in recognizing inflation. Now they say it's [00:00:39] Speaker 3: unclear when it'll be. How do you think about that? I think they'll conquer it, but it's going to take them longer than they thought. For Americans, they're feeling it pretty hard. I know, but we made a mistake and now they have to fix it. Inflation is going to come down. The question is, by the end of this year, 4%, I don't know. But I think it'll take a little bit longer, they think, because of wages. And you have, obviously, commodity prices go up and down all over the place. So, unfortunately, if it weren't for all the geopolitical stuff, I think there's a good chance you'd have a mild recession. What do you think? I think the geopolitical stuff is explosive. Is explosive. Yeah. That's the thing that can make the difference. It's turbulent. It's like anything go wrong. The oil/gas price go to $120. The food, the emerging markets, you know, a war breakout somewhere else, some kind of mistake with, uh, you know, missiles like in Poland, so... And what you're describing, [00:01:40] Speaker 2: though, as you're saying, all of that creates uncertainty, so companies tap the brakes. They start slowing down intentionally. And we've seen a little bit of that already, yeah. [00:01:48] Speaker 1: CBS News Chief Foreign Affairs Correspondent and Face the Nation moderator, Margaret Brennan, joins me now. Margaret, it's good to be with you again. Um, so, we talked about in the intro to this piece, a lot of these numbers look good. Diamond's talking about this geopolitical risk. Um, but is that, is that the central reason he thinks there's going to be a recession next year? [00:02:11] Speaker 2: Well, it's a confluence of factors, but fundamentally, John, what I think is interesting here is because what you just laid out, there are those positive economic numbers happening. Uh, but then we all are starting to hear about job cuts also happening. Some of them concentrated right now. We're starting to hear, um, that things are actually having an impact on planning ahead. And that's what JP Morgan's, uh, CEO, Jamie Dimon is talking about. He fundamentally believes the US economy is strong, that America is, uh, competitively in a good place in part because of its abundant natural resources and ability to keep fueling itself. But what he's laying out there is the amount of, um, risk factors that are really hard for a risk manager. And that's really what a CEO is, um, to try to plan ahead. And that's why you're seeing this caution from business leaders as they look at those storm clouds on the horizon. So you may not be feeling the recession now, but they're planning for it ahead. And he's laying out that it's not just your average pullback. He's talking about, uh, the globe going through some pretty major changes in a way that could have, [00:03:22] Speaker 1: um, reverberations for decades. Right. So instead of just, uh, unpleasant things, which would be, uh, you know, firings or wages going down, he's talking about uncertainty with crazy things. You just can't predict that would come from anywhere. So I want to ask you, what's his feeling, he said the fed got it wrong. Um, so what's his feeling about what it means for them to get it right and what that would look like? And does he think they're on that path? [00:03:50] Speaker 2: Well, what, I mean, you know, this well, John, because you, you've covered economics for so long when the federal reserve raises interest rates, it, it has a impact for so many different factors. You know, one of the things Jamie Dimon is concerned about is emerging market debt crisis in the, in the year that poor countries who've taken on debt will suddenly collapse under the weight of it because of these interest rate fluctuations that are being planned. So, um, when he's talking about planning here at home, he's trying to put all those pieces together. He's saying in that exchange, you just heard that, uh, the federal reserve can control what it can control. It can't control oil. It can't control food. It can control, um, this benchmark rate and that he thinks it will continue to be raised up until, uh, about 5%, then pause for a little bit, but then he thinks they will have to resume rate increases from there once again. And he's saying there that, uh, don't think of the nightmare scenario, like, you know, the late seventies, early eighties, that this takes a decade to sort of work its way out of the system. He thinks the federal reserve and the central bankers who are trying to cool off inflation will succeed, but that means it will be painful for a bit for, for some of the rest of us when it comes to, for example, if you're trying to get a mortgage rate right now and buy that first home, it's going to be expensive for a while. Um, if you're one of those emerging market countries that took on debt, um, and you're looking at a stronger dollar, that's going to be a little bit more painful for you as well. So, uh, he's looking at it in that global context. Okay. Margaret, [00:05:24] Speaker 1: thanks so much for being with us. We'll see you on Sunday. Thanks John.