A billionaire financial expert has raised the alarm about a terrifying economic “hurricane” he says is “coming our way.”
An American billionaire has raised the alarm about an impending economic ‘hurricane’ as prices continue to rise.
Jamie Dimon, CEO of JPMorgan Chase — whose financial views are well-respected by Wall Street insiders — told attendees at a conference this week that Russia’s invasion of Ukraine, skyrocketing inflation and rate hikes by the US Federal Reserve were working together to create a cause financial disaster.
Mr Dimon — who has headed the largest of the four major US banks since 2005 and boasts staggering assets of $1.8 billion — said he expected “poor results” on the horizon.
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‘There are big storm clouds here. It’s a hurricane,” he said.
“That hurricane is right there on the road heading our way. We just don’t know if it’s a minor or Superstorm Sandy… And you better brace yourself.”
Mr Dimon also said the Fed’s decision to pursue “quantitative tightening” – a monetary policy tool designed to reduce the amount of money in the economy – as it simultaneously raises interest rates could prove disastrous. , and claims that people are “about [this] in history books for 50 years”.
He also warned that the conflict in Ukraine could push the price of oil to $175 a barrel, and that not enough was being done in the coming years to protect Europe from its effects.
Bad news for Australians
While Mr Dimon spoke specifically about the situation in the US and Europe, his claims also mean bad news for Australia.
In April of this year, Deutsche Bank forecast a “great recession” for the US, claiming that the US Federal Reserve’s efforts to suppress inflation would lead to a more severe downturn than previously expected.
“We’re going to have a major recession,” Deutsche Bank economists wrote in an alarming report, arguing that it would be “a long time” for inflation to fall to the 2 percent target, which therefore meant interest rates were likely to drop. jacked up significantly, which in turn would hurt the economy.
At the time, AMP chief economist Shane Oliver told news.com.au that while a recession in the US was not yet a certainty, a downturn in the US would be “bad news” for Aussies.
“It may not be clear until later next year and there are many doubts about whether we will see a recession, but if it does it will be bad news for Australia,” he said.
“The US is the world’s largest economy… and it affects business and consumer confidence, and it also affects the demand for our exports simply because the US is part of the global economy, although it is not the same as China, our largest export market.”
It was a sentiment echoed by Peter Martin, a guest fellow at the Australian National University’s Crawford School of Public Policy, in a recent article for The conversation†
“Australia’s biggest economic threat is not homegrown. It’s a recession that originated in the United States,” Martin wrote.
While he claimed that “there is a chance we can escape” the effects of a “another US-led global recession”, it will be “willing to change our budget and interest rate settings in the blink of an eye”.
Inflation out of control
Meanwhile, Australians are already feeling the pinch after inflation rose 5.9 percent in the past year – the biggest single-year increase since 2001.
According to IBISWorld, the biggest factor has been rising fuel prices, which “raised an average of 35.1 percent through March 2022.”
That, in turn, has pushed up freight costs for businesses that rely on the transportation of items, while at the same time the world has seen “significant supply chain disruptions, coupled with high global and domestic demand,” leading to “significant price hikes.” . in fuel and food”.
According to Senior Industry Analyst Victoria Baikie, “Consumers and businesses have had to pay much more at the pump for the same amount of fuel, which has been a major contributor to a spike in inflation.”
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