Kristalina Georgieva, managing director of the International Monetary Fund (IMF), is the latest prominent voice to warn of a looming global recession. She first noted its unexpected durability in the face of incredible odds stacked against it. Recently, Jamie Dimon, chair and chief exec of JPMorgan Chase has joined that chorus of increasing concern about a possible correction in U.S. markets. Her comments follow his concerns to the T.
Georgieva’s remarks underscored the complexities of the current economic landscape, particularly in light of Donald Trump’s trade war. She pointed out that even with these tensions, the world economy is holding up well to multiple pressures. Georgieva warned that “uncertainty is the new normal,” indicating that all policymakers and investors should stay on their toes moving forward.
On a recent interview with the BBC, Dimon didn’t mince words. On CNBC last week, he acknowledged that he’s “far more concerned than everybody else” about the potential for a serious market correction. “That is a very deep correction.” He predicted that some sort of meaningful correction would come in the next six months to two years. Among these, Dimon brought attention to various risks that are driving this fear. Geopolitical tensions, increased fiscal spending and the remilitarization of several countries are among them.
In his short-term, macro-economic analysis of market risks and prospects, Dimon was a tank rolling against the grain. He warned that a stock market crash was inevitable. His best guess likelihood was about 30%, much more than the 10% that most financiers seem to think right now.
“I would give it a higher probability than I think is probably priced in the market and by others. So if the market’s pricing in 10%, I would say it is more like 30%.” – Jamie Dimon
Dimon’s worries are symptomatic of a larger jitteriness before an upcoming economic recession. He suggested that the degree of uncertainty about the future state of the economy is probably a lot greater than you’d assume by default. Even more, this perspective calls upon both investors and analysts to re-evaluate their expectations of market outcomes and be ready for a change in market dynamics.
Georgieva’s remarks and Dimon’s doomsday predictions signal the razor edge between danger and recovery that defines today’s global economy. As leaders grapple with ever increasing risks, their experiences are an important barometer to help guide us through the uncertain landscape that lies ahead.