On The Money — Why a major banker sees a US recession on the way

JPMorgan Chase CEO Jamie Dimon is getting nervous. We’ll also look at the
10 cities with the biggest home price drop in recent months, a warning from IMF and World Bank leaders, and more. 

But first, see what tweet is putting GOP members of the House Judiciary Committee under pressure. 

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.

CEO warns US faces likely recession next year 

The head of the largest U.S. bank said Monday he believes a combination of rising interest rates and geopolitical tensions will drive the U.S. and global economies into recession before the end of 2023. 

“These are very, very serious things which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now,” JPMorgan Chase CEO Jamie Dimon said at a Monday event hosted by CNBC. 

• While Dimon said the U.S. economy remained strong at the moment, he expressed fears it would slide into a recession at some point next year as the Federal Reserve boosts interest rates to fight rising inflation.  
  
• The prevalence of high prices combined with rising interest rates and looming recession across much of the rest of the world, Dimon warned, make for a “very serious” obstacle for the U.S. 

“It can go from very mild to quite hard,” Dimon said of a potential recession, “and a lot will be reliant on what happens with this war” between Russia and Ukraine. 

Sylvan explains why here. 

DROPPING FAST

Here are the 10 cities with the biggest home price drop since June 

The Federal Reserve has raised interest rates by 1.5 percent since June in a bid to cool inflation, hikes that are contributing to a cooling housing market and higher monthly mortgage payments. 

• The median list price in Austin now stands at $558,275, a 10.3 percent decline since prices peaked in June, according to an analysis from Realtor.com. 
  
• Coming in second on the list is Phoenix, where the median price has dipped by 9.9 percent since June. The median home price in the Arizona capital is $493,500.    

“Home shoppers in these areas are probably excited to see these prices come down. But to put it into context, it’s still above where it was last year,” Realtor.com Chief Economist Danielle Hale said in the analysis.  

Adam Barnes has more here. 

RECESSION RISK

IMF, World Bank leaders warn of growing risk of global recession 

The heads of the International Monetary Fund (IMF) and the World Bank on Monday warned of economic headwinds that are raising the risk of a global financial recession.  

“There’s the risk and the real danger of a world recession next year,” World Bank Group President David Malpass told IMF Managing Director Kristalina Georgieva during their discussion.  

“But the currency depreciation means that the debt levels for the developing countries are getting more and more burdensome,” Malpass added. “The rise in interest rates puts added weight on it. And inflation is still a major problem for everyone, but especially for the poor.” 

Olafimihan Oshin has more here. 

‘UNHELPFUL AND UNWISE’

Yellen: OPEC production cuts will hurt economy 

Treasury Secretary Janet Yellen in a new interview expressed worry that OPEC+ countries’ decision to cut oil production will hurt the global economy, especially in developing countries. 

“I think OPEC’s decision is unhelpful and unwise — it’s uncertain what impact it will end up having, but certainly, it’s something that, to me, did not seem appropriate, under the circumstances we face,” Yellen told the Financial Times. “We’re very worried about developing countries and the problems they face.” 

• The move was a large blow to President Biden, who visited oil-rich Saudi Arabia in a July trip to appeal to Saudi Crown Prince Mohammed bin Salman.
    
• Biden faced criticism from some over the trip given Saudi Arabia’s human rights record, namely the death of journalist and Saudi dissident Jamal Khashoggi, and Riyadh announced a production increase following Biden’s visit that was smaller than hoped for by his administration. 

The Hill’s Zach Schonfeld breaks it down here. 

Good to Know

The Social Security Administration is expected to announce its largest cost-of-living adjustment (COLA) to Social Security in four decades on Thursday, a move that could leave people living on the program with more income to deal with inflation.  

It is expected that the hike will be 8.7 percent, a boost to the more than 70 million Americans benefiting from the program. Retirees, widowers, those who are disabled and others will all see the increase reflected in their 2023 benefits. 

Here’s what else we have our eye on: 

• Workers at an Iranian oil company went on strike Monday as ongoing anti-government demonstrations creep into important sectors of the country’s economy. 
  
• Ukraine’s energy ministry said Russia’s strikes on Monday marked the largest attack on the country’s power grid since the start of the invasion, asking residents to conserve power use as officials halt electricity exports. 
  
• A pair of Democratic lawmakers is proposing the U.S. halt arms sales to Saudi Arabia in response to oil production cuts from the Organization of the Petroleum Exporting Countries (OPEC). 

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.