The U.S. economy is on the mend and has been getting better, but JPMorgan Chase CEO Jamie Dimon said chief executives he has spoken to have told him they are already making decisions to protect their companies from a looming “fiscal cliff.”The mix of automatic spending cuts and the expiration of Bush-era tax cuts at the end of the year could cut U.S. growth in 2013 and send the economy back into a recession, according to economists.
Chief executives of 80 big U.S. companies, including Dimon, have been lobbying for a deal to avert such an outcome.
“I’ve spoken to CEOs who say, you know, absolutely, we are making decisions to protect ourselves from the ‘fiscal cliff’ and those are like investment decisions and hiring decisions,” Dimon told CNBC-TV18 in India, during a visit to the country.
(Read More: JPMorgan Took a Bath on Bear Stearns Buy, Says Dimon)
Dimon said the so-called fiscal cliff could end up being worse than a 3 per cent contraction that economists have so far predicted.
“[The fiscal cliff] alone would take 3 per cent or so out of (gross domestic product), that is a recession,” he said. “The problem is that’s kind of a static analysis, people’s reaction could actually make it worse.”
According to Dimon, the outcome of the election isn’t as important as good fiscal policy to deal with the country’s rising debt.
(Read More: John McCain Slams Ben Bernanke and Jamie Dimon)
“We need good policy in the United States — think of a fiscal deal, a Simpson-Bowles-type deal. I think that would make a difference, and we would urge anyone who becomes president to try to get some of that done quickly,” he said. “A fiscal cliff and another recession would be terrible for America, we should do everything we can to avert something like that. So it’s not about JPMorgan.
It’s about what’s right for the country.”
—By CNBC’s Deepanshu Bagchee; Follow Him on Twitter @DeepCNBC
- Why CEOs Are on the ‘Fiscal Cliff’ Warpath
- US CEOs Call for Action to Reduce Federal Deficit
- Romney Win Would Be Better for Avoiding ‘Fiscal Cliff’: Goldman
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