‘Central banks came too late to the game’ to fight inflation, says Jamie Dimon
TOKYO — Conditions for an economic storm, including monetary tightening, inflation and the war in Ukraine, have all fallen into place, JPMorgan Chase CEO Jamie Dimon told Nikkei, warning that the world could see more “surprises” like the near meltdown of U.K. pension funds. Dimon had previously predicted an economic “hurricane” in June, challenging the more bullish outlook held by other Wall Street executives at the time. “The storm I was talking about, or the potential storm, includes inflation, higher rates, global tightening, quantitative tightening and the effect of the war on the global economy — particularly oil prices, food prices, supply chain issues, etc.,” he said. “Those things have all kind of happened.” “These are very serious issues we have had to deal with” and “we still don’t know what the outcome will be,” he said. The U.S. Federal Reserve raised interest rates by 0.75 point for the fourth straight time October. But “central banks came too late to the game” because they saw inflation as a temporary phenomenon, Dimon said. “It looks like the United States will go to close to 5%” by the end of the year then take a pause, he said, predicting that “hopefully inflation will be coming down” by then. But he also pointed to factors that could lead the Fed to continue raising rates. “There are plentiful jobs. Wages are going up,” he said. “Usually what happens is that the unemployment rate goes up a little bit, and the jobs are not as plentiful as before, and that reduces wage inflation. You haven’t quite seen that yet.” Barring major economic impacts from the Ukraine war, the economy is likely headed into a “mild recession,” he said. NN: Inflation has not been put to bed yet… Far from it. Below is what is referred to as the Feds wage inflation index……..
The Atlanta Fed’s Wage Growth Tracker
The Atlanta Fed’s Wage Growth Tracker (a three-month average of median wage growth) was 6.4 percent in October, similar to September’s reading of 6.3 percent. For people who changed jobs, the Tracker in October was 7.6 percent, compared to 7.9 percent in September.