JPMorgan CEO Doubles Down on Recession Warning, Says Downturn Could Be 'Mild or Hard'

Americans should prepare for an economic decline either way.

There was a point earlier this year when financial experts were sounding dire warnings about an upcoming recession in 2023. And JPMorgan CEO Jamie Dimon was one of them.

Dimon's views on the economy haven't changed. He still acknowledges that high levels of inflation could send the U.S. into a recession at some point in the new year. And also, he thinks a big reason the economy is still in decent shape is that Americans still have stimulus funds to spend. Once that money runs out, consumer spending could decline a lot.

But Dimon is no longer assuming the worst. Rather, in a recent CNBC interview, Dimon said that a 2023 recession could be "mild" or "hard," depending on how things play out.

We all hope that if a recession does strike, it leans toward the mild end. And the reality is that it's possible for recessions to be short-lived and cause limited financial pain.

At the same time, it's important to gear up for the possibility that we could be looking at a more difficult recession come 2023. And it's just as essential to take steps to prepare.

Don't leave yourself vulnerable during a recession

We can't say with any amount of certainty that a recession is guaranteed to hit in 2023, or what type of recession it will be. But it's also important to recognize that recessions are a part of the economic cycle and naturally tend to arise every so often. And so even if a recession doesn't strike in the new year, we will face one eventually.

That's why it's important to prepare for that possibility. And the best way to do so is to have a strong emergency fund.

At a minimum, you should aim to have enough money in your savings account to cover three full months of essential living expenses. However, in the wake of the COVID-19 pandemic, many financial gurus have changed their tune on the emergency savings front. While experts used to recommend saving enough cash to cover three to six months of bills, many are now advising to save enough to cover nine to 12 months of expenses.

Which end of that range should you aim for? It depends on your situation. If you're single with a flexible living arrangement (say, a month-to-month rental), then three months' worth of living costs in savings may be fine. If you're married, own a home, have kids, and are the sole income-earner in your household, then you may want to look at saving enough to hit the higher end of that range.

Be hopeful but prepared

Much of the recent messaging around a 2023 recession has been confusing. Even Dimon's predictions are hard to work with. Should we be gearing up for a light economic downturn, or a major crisis?

But the reality is that Dimon doesn't know. Nobody knows. And so your best bet is to shore up your savings so you're in a good position to ride out a recession, whether it's mild, horrendous, or somewhere in between.