Jamie Dimon skeptical about Goldilocks economy scenario

Many big banks believe a recession—if it did happen—would be mild.

Bank of America, for example, believes the U.S. economy will have a soft landing, Citi says there is a “chance” of recession, and Goldman Sachs puts its recession likelihood at just 15%.

But Dimon warned peers not to be lulled into a false sense of security, dismissing calls of a so-called “Goldilocks” growth where the economy is neither too hot nor too cold.

It’s a theory backed by Wharton Professor emeritus Jeremy Siegel, who this week said: “The data is not too strong to encourage the Federal Reserve to tighten, and certainly not too weak to start a slowdown in corporate profits.”

Dimon disagrees, saying a host of back-seat issues could disrupt the fore in the next 12 months.

“Right now the market’s kind of priced in a soft landing,” he told Fox Business in an interview released yesterday.

“You see that in equity prices, credit spreads being very narrow. But the extra money that [consumers] got during COVID, trillions of dollars, that’s kind of running out. It’s been pushed out for a whole bunch of reasons but it runs out this year.

“The government has a huge deficit which will affect the markets. I’m a little skeptical on this Goldilocks scenario. I still think the chances of it not being a soft landing are higher than other people.”

America’s national debt has increased to an eye-watering $34.01 trillion following rounds of fiscal stumble during and after the coronavirus pandemic.

The record-breaking figure has begun to spook analysts with Maya MacGuineas, president of the Committee for a Responsible Federal Budget, describing the milestone as a  “truly depressing…