Dimon: US heading into ‘bad recession’ with financial threats akin to 2008

JPMorgan Chase chief executive Jamie Dimon predicted Monday that the U.S. is heading into a “bad recession” amid the coronavirus pandemic that would expose the bank to “billions of dollars of additional credit losses.”

In his annual letter to Chase shareholders, Dimon warned that the U.S financial system would face levels of stress akin to 2007-08 crisis that derailed the global economy.

Dimon said Chase’s capital reserves and blockbuster 2019 earnings — $48 billion before taxes — would help the country’s largest bank weather the crisis and customers to delay mortgage and other debt payments during the pandemic. But Dimon warned that the recession caused by the coronavirus would severely impact the bank’s 2020 revenue.

“We don’t know exactly what the future will hold,” Dimon wrote, “but at a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008. Our bank cannot be immune to the effects of this kind of stress.”

Dimon, Chase’s chief executive since 2005, is the sole CEO of a global, systemically important U.S. bank during the 2008 recession to remain in his position. A frequent presence in Washington, D.C., Dimon typically uses his shareholder letter to opine on topics far beyond the bank’s financials, including public policy and politics.

His warning comes amid deepening economic harm caused by the coronavirus pandemic, which has forced millions of Americans out of work while shuttering thousands of businesses.

The U.S. lost 701,000 jobs in March, according to the monthly employment report released Friday by the Labor Department, though the survey captured but a sliver of the total economic damage. More than 10 million Americans have applied for unemployment benefits in the final two weeks of March, shattering records for weekly jobless claims and prompting fears of Great Depression-level devastation.

“If we had a timely unemployment statistic, the unemployment rate probably would be up to 12 or 13 percent at this point and moving higher,” Former Federal Reserve Chairwoman Janet Yellen said in a CNBC interview.

Yellen also predicted a loss of “at least 30 percent” in gross domestic product for the second quarter, if not worse.