JPMorgan Chase's Damon: The United States is still likely to experience a recession, with a 40% chance of a soft landing, and the Federal Reserve may not be able to reach its inflation target

After leading JPMorgan Chase for eighteen years, CEO Jamie Dimon still predicts that, compared to a soft landing, the United States is more likely to fall into an economic recession. He also believes that although the Federal Reserve may not truly achieve its self-set inflation target of 2%, the Fed will soon cut interest rates.

In February of this year, Dimon stated that the market's optimism about the United States avoiding an economic recession is too high, with a 70% to 80% chance of a successful soft landing, while he only sees a 50% chance of success. On Wednesday, August 7th, Eastern Time, the media asked Dimon if he had changed his view from February, to which Dimon replied that the probability of a soft landing he predicted remains the same. In other words, Dimon still believes that there is approximately a 35% to 40% chance of a soft landing in the United States. An economic recession is still the most likely outcome in Dimon's view.

Dimon also expressed doubts about whether the Federal Reserve can achieve its goal of reducing the inflation rate to 2%, as the United States will increase its investment in green economy and military in the future. He mentioned that geopolitical issues and factors like QT still bring a lot of uncertainty to the economy. He said:

"There is currently a lot of uncertainty. I have always pointed out that geopolitical issues, housing, deficits, spending, quantitative tightening (QT), elections, all of these can cause panic in the market."

Dimon also mentioned that the Federal Reserve may cut interest rates soon, but "I don't think it's as important as others think."

On the day of Dimon's speech, a report by JPMorgan Chase economists led by Bruce Kasman projected that by the end of this year, the possibility of the U.S. economy falling into a recession is 35%, higher than the 25% they predicted at the beginning of last month. By 2025, or the second half of next year, they still estimate the likelihood of an economic recession to be 45%.

The report stated, "We have slightly raised our assessment of the risk of an economic recession, and compared to that, the adjustment to our interest rate outlook is more significant." JPMorgan Chase economists currently believe that the possibility of the Federal Reserve and other central banks maintaining interest rates at high levels in the long term is only 30%, down from the 50% predicted two months ago.

Wall Street News previously mentioned that after the U.S. Department of Labor announced that the July non-farm payroll employment numbers were far below expectations last Friday, several Wall Street institutions adjusted their expectations for a Fed rate cut this year.

Among them, Goldman Sachs stated that if August employment continues to be weak, there is a possibility of a 50 basis point rate cut in September. Citigroup stated that rate cuts of 50 basis points are possible in both September and November, with the policy rate range for next year dropping to 3% to 3.25%. JPMorgan Chase also expects rate cuts of 50 basis points in September and November, and further believes that there is reason for the Fed to conduct emergency rate cuts between meetings before the September meeting