Tags: dimon | recession

Dimon: Recession Will Last Well into 2009

By    |   Wednesday, 14 Jan 2009 09:38 AM

You know things are getting bad when big bank CEOs, who usually act as the economy’s biggest cheerleaders, start getting negative.

Now you can count Jamie Dimon, chief executive of JP Morgan Chase, the country’s second-largest bank, among the bears — or realists, if you prefer.

Dimon told a healthcare conference this week that the year-old recession will last for at least another two quarters.

“The financial system went into cardiac arrest,” he says.

Dimon was referring to the chain of events this year that included the downfall of Lehman Brothers, AIG, Merrill Lynch, Fannie Mae, and Freddie Mac.

The financial meltdown spread to the economy as a whole, and experts forecast that GDP could shrink by as much as 5 percent in the first quarter of this year and in the fourth quarter of 2008.

Dimon sees unemployment soaring perhaps to 10 percent, which would be the highest rate since June 1983. The jobless rate reached 7.2 percent last month.

That of course would just cause further problems for the economy as consumers refrain from spending and struggle to pay their bills.

The recession also has produced “terrible” earnings results for JP Morgan, Dimon acknowledges. The bank is expected to earn 3 cents a share in the fourth quarter

Dimon isn’t alone in his worries for the economy. The average forecast in Bloomberg’s latest survey of economists calls for a 1.5 percent shrinkage in GDP this year, a half percentage point more than projected last month.

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You know things are getting bad when big bank CEOs, who usually act as the economy’s biggest cheerleaders, start getting negative.Now you can count Jamie Dimon, chief executive of JP Morgan Chase, the country’s second-largest bank, among the bears — or realists, if you...
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Wednesday, 14 Jan 2009 09:38 AM
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