JPMorgan Chase CEO Jamie Dimon predicts the U.S. will soon enter a "bad recession," adding that banks will likely see financial stress similar to what they experienced in 2008 during the global financial crisis.
Dimon said his bank — the country's largest — was preparing for economic growth plunging as much as 35% in the coming weeks and months. The nation's unemployment rate could reach 14% — which would be the highest rate since the Great Depression — and may not peak until the end of this year.
Dimon made the dire predictions as part of his annual letter to shareholders. For now, it remains unclear "how fast or slow the recovery will be," or how his bank would fare in the crisis, he said. Dimon added that JPMorgan is participating in the government's and that it will continue to lend to its millions of consumer and business clients, while noting that those efforts could expose the bank to significant financial losses.
"Recognizing the extraordinary extension of new credit, mentioned above, and knowing there will be a major recession mean that we are exposing ourselves to billions of dollars of additional credit losses as we help both consumer and business customers through these difficult times," Dimon wrote.
Dimon said the economic damage from efforts to slow the novel coronovirus could persist longer than previously thought. Many on Wall Street predict a swift rebound once the outbreak is contained, but Dimon is more pessimistic.
"We have always been serious about stress testing and run an enormous number of tests per week so that we are prepared for most crises," Dimon wrote. "But as is often the case, this 'actual new crisis' — while it shares attributes with what is being stress tested — is dramatically different from the expected."
The banker, who leads a company that employs around 250,000 people overseeing $2.6 trillion in assets, said people shouldn't return to work until it is clear the U.S. health system is equipped to deal with the crush of coronavirus patients and the U.S. Centers for Disease Control deems it safe.
Dimon said the timetable for getting Americans back to work "could be accelerated" if there is adequate access to testing for the virus. Others on Wall Street, and even President Donald Trump, have been criticized for suggesting the economy should reopen more quickly.
"Done right, a disciplined transition would maximize the health of Americans and minimize the time, extent and suffering caused by the economic downturn," Dimon wrote.