Wall Street bankers warn of major economic ‘hurricane’ on horizon

Rising costs, worsening inflation coupled with supply chain stresses, and a range of domestic policies are creating an economic storm of epic proportions, top bankers warn.

The Wall Street financial sector in New York. (Shutterstock)

(The Center Square) — While Florida, Gulf states and southeast Texas are preparing for hurricane season, which began June 1, an economic hurricane is on the horizon, top Wall Street bankers warn.

Rising costs, worsening inflation coupled with supply chain stresses, and a range of domestic policies are creating an economic storm of epic proportions, top bankers warn.

On June 1, JPMorgan Chase & Co. CEO Jamie Dimon warned investors to prepare for an economic “hurricane,” especially as the Federal Reserve continues to tighten monetary policy reportedly to offset inflation.

“That hurricane is right out there down the road coming our way,” Dimon said at the bank’s investor day conference last Wednesday, Bloomberg News reported. “We don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself.”

However, “bright [economic] clouds” exist, he pointed out. They include consumer spending, rising wages (although not enough to keep up with inflation), and the large amount of available jobs.

Goldman Sachs President John Waldron expressed similar concerns at an investor meeting the next day. Being careful to avoid “using any weather analogies,” he said of the current economic environment, “This is among — if not the most — complex, dynamic environments I’ve ever seen in my career,” according to Bloomberg News. “The confluence of the number of shocks to the system to me is unprecedented.”

Waldron, a vocal banking industry critic of the Federal Reserve, said “tougher economic times” are ahead, worse than the existing rising costs of inflation and supply chain shortages burdening Americans.

“We expect there’s going to be tougher economic times ahead,” he said. “No question we are seeing a tougher capital-markets environment.”

Of the investment bank, “whatever the economic environment is,” he said, “we will do just fine.”

The warnings come after Goldman Sachs CEO David Solomon told CNBC last month that “there’s a reasonable chance at some point that we have a recession or we have … very, very slow sluggish growth.”

And tech executives, including billionaire Tesla CEO Elon Musk, argue the U.S. is already in the early stages of a recession or will be in one soon.

They also come after the Biden administration and Democratic-controlled Congress increased the national debt through increased spending enabled by the Treasury Department printing more money, decreasing the value of the dollar.

Administration policies hampering oil and gas production, combined with other factors, caused gas prices to rise significantly and inflation to hit a 40-year high in Biden’s first year in office, before the Russian invasion of Ukraine. As consumer prices climbed in response to rising costs to transport goods, companies reported significant earning losses, prompting the stock market to take a record hit last month.

With Americans already altering plans and spending habits due to rising costs, an economic hurricane would only make matters worse, analysts argue.