JPMorgan CEO Jamie Dimon Puts the Odds of a Recession at a Coin Flip, but He Says This Economic Cycle Is Different for 1 Reason

Bram Berkowitz, The Motley Fool

Fri, Apr 11, 2025, 9:38 AM 5 min read

Two days after President Donald Trump issued a 90-day pause on higher tariff rates for most countries except China, JPMorgan Chase (NYSE: JPM) CEO Jamie Dimon warned that the "economy is facing considerable turbulence," citing concerns of trade wars, persistent inflation, and fiscal deficits. In JPMorgan's first-quarter earnings call this morning, Dimon placed the odds of a recession at a 50-50 coin flip.

Yet despite his ongoing concerns about the economy and the administration's trade negotiations, Dimon said he's less concerned about a recession in the current climate and has other things on his mind during this economic cycle for one reason, in particular.

If you were to block out all the noise and focus on JPMorgan's first-quarter earnings, one might simply see business as usual. The bank beat analyst estimates on earnings and revenue and actually slightly lifted its guidance for net interest income, one of the primary sources of revenue for most banks. Meanwhile, credit came in solid, with stable net charge-offs and lower nonperforming assets in the first quarter than the prior quarter. The bank built its credit reserves by about $1 billion, half the amount it did in the previous quarter.

Still, Dimon cautioned against reading too much into the backward-looking results and forecast. "We should have not given you that forecast. We don't know what the number's going to be. I would say it's a short-term number and based on what's happening today, there's a wide range of potential outcomes," he said. The guidance alludes to some things that are mechanical, like how loan losses flow through a bank. They don't just happen overnight. First, they are marked delinquent, and it can take months until they are actually ruled as a loss.

Dimon also said he expects analysts to eventually reduce their earnings forecasts for the broader benchmark S&P 500 (SNPINDEX: ^GSPC) and pencil in zero growth, down from an earlier projection of about 10%, which they have since lowered to 5% growth.

Dimon is not worried about JPMorgan navigating a recession, saying the bank has plenty of capital and liquidity to deal with whatever is thrown its way. He also noted the bank added $15 billion to its credit reserves in two months during the COVID-19 pandemic, only to release an equivalent amount of reserves several months later, partially due to the forward-looking way banks must now account and prepare for loan losses.

JPMorgan Chase also ended the first quarter with a 15.4% common equity tier 1 (CET1) capital ratio, which compares a bank's core capital to its risk-weighted assets such as loans. This is the capital banks lean on to cover unexpected loan losses. JPMorgan's ratio of 15.4% is 300 basis points higher than when the pandemic started, which equates to billions of dollars of additional capital.