Top Wall Street CEOs amplify recession warnings as bets on dismal 2023 swell

A chorus of Wall Street CEOs is sounding the alarm about the state of the American economy rose stronger this week as leaders stepped up warnings of a possible recession in 2023.

Relentless inflation, combined with the most hawkish Federal Reserve in decades, has raised the specter of a slowdown next year, according to some of the nation’s most prominent CEOs.

Jamie Dimon, CEO of JPMorgan Chase, Brian Moynihan, CEO of Bank of America, and David Solomon, CEO of Goldman Sachs, revived their dire predictions of a downturn in 2023 as they struck a pessimistic tone about the health of the economy.

“You have to assume that we have tough times ahead,” Solomon said Tuesday during an interview on Bloomberg Television. “You have to be a little more careful with your financial resources, with your sizing and the footprint of the organization.”


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Jamie Dimon, managing director of JPMorgan Chase & Co., during an interview with Bloomberg Television in London, Wednesday May 4, 2022. (Photographer: Chris Ratcliffe/Bloomberg via Getty Images/Getty Images)

This may mean an increased focus on costs and a slowdown in hiring, which Goldman has already undertaken.

“It could also be from pruning in some areas,” Solomon added.

Dimon, the head of America’s largest bank, echoed that sentiment during an interview with CNBC on Tuesday. While he noted that businesses are still in good shape and consumer spending remains strong — households are accumulating about $1.5 trillion in excess savings from pandemic relief programs — that might not not last long.

“Inflation is eroding everything I just said, and that $1.5 trillion will run out by the middle of next year,” Dimon said. “When you look at this going forward, these things may very well derail the economy and cause this mild to severe recession that people are worried about.”

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David Solomon, CEO of Goldman Sachs & Co., speaks at the Bloomberg New Economy Forum in Singapore, Wednesday, November 17, 2021. (Photographer: Bryan van der Beek/Bloomberg via Getty Images/Getty Images)

The economic outlook has darkened further following the Fed’s most aggressive interest rate hike campaign in decades as policymakers struggle to rein in inflation that is still near a high of 40 years.

In a troubling development, however, the Fed’s rate hikes have so far failed to keep inflation in check: the government announced last month that the consumer price index had risen by 7, 7% in October from a year earlier, well above the Fed’s 2% target. This indicates that the Fed will need to continue to chart its aggressive course, increasing the odds that it will crush consumer demand and drive up unemployment.


Policymakers may eventually raise interest rates to as much as 5% next year, Dimon said, and even “that may not be enough.”

Dimon had previously warned that the United States could be heading for a “hurricane” due to rising interest rates, inflation and the war in Ukraine; however, he declined to say on Tuesday whether he thought an impending downturn would be mild or severe.

“What I said about a hurricane, I said these storm clouds might ease it,” he said. “It could be a hurricane. We just don’t know.”

Fed officials plan to raise interest rates by one basis point at their next meeting in an attempt to bring inflation under control.

Federal Reserve Chairman Jerome Powell speaks during a press conference following a meeting of the Federal Open Market Committee in Washington, DC on May 4, 2022. (Photographer: Al Drago/Bloomberg via Getty Images/Getty Images)

History indicates that the business giants might be correct in predicting a downturn. Recent research by Alan Blinder, former vice chairman of the Federal Reserve Board and Princeton economist, identified 11 cycles of tightening since 1965, eight of which were followed by recessions.


Still, that doesn’t mean a severe recession is guaranteed. There have been five cases of very mild recessions in which GDP fell by less than 1% or there was no economic decline at all.

Bank of America CEO Brian Moynihan said in an interview with FOX Business’ Neil Cavuto on Tuesday that he predicts the United States could slide into a recession next year, although he expects she could be sweet.

“We’re going to have a shallow recession,” he said. “At the end of the day, we need to get inflation under control, and that’s what the Fed is trying to do.”

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