JP Morgan CEO Warns Businesses Are Going to Default on Loans

As financial markets reel from a new round of tariffs and bond sell-offs, JPMorgan Chase CEO Jamie Dimon issued a stark warning that credit problems are mounting and corporate loan defaults may soon follow.

In an interview with Fox Business on Wednesday, Dimon said rising interest rates, sticky inflation, and widening credit spreads are setting the stage for a wave of financial strain among U.S. companies.

Why It Matters

Dimon's warning coincides with major turbulence in global bond markets and intensified fears of recession.

JPMorgan economists recently raised their forecast for a U.S. and global recession to 60 percent, up from 40 percent following President Donald Trump's imposition of sweeping tariffs on dozens of countries, including 104 percent tariffs on Chinese imports.

What To Know

During a Wednesday appearance on Mornings with Maria, host Maria Bartiromo asked Dimon if he thinks America will see a rise in loan defaults. Dimon said he hasn't seen defaults yet but he is expecting to.

"So long as you have rates going up...inflation is sticky and credit spreads are gapping out, which they're going to, I think you'll see more credit problems," Dimon said.

Dimon said he usually doesn't pay attention to anecdotes, but that he's hearing from business leaders that they're going to cut back on spending an investing, which is "recession talk."

Massive selloffs in U.S. Treasuries pushed the yield on 10-year notes to nearly 4.5 percent, according to Reuters. That surge in yields raises borrowing costs for businesses and households, with implications for credit availability and economic activity.

Adding to the strain, IPO activity has stalled and mergers and acquisitions are down 13 percent in the first quarter of 2025, according to data compiled by Dealogic for Reuters.

Dimon did not hedge his view that the artificial support provided to corporations during the COVID-19 pandemic has largely dried up.

"Part of that [profit growth] was because of our extraordinary fiscal spending," he said. "We borrowed and spent $11 trillion since COVID, and that obviously drives a lot of growth. It drives corporate profits."

What People Are Saying

Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "There's more to a potential recession than just tariffs. As interest rates have climbed and some businesses are dealing with a fall-off from the end of the post pandemic-boom and rising prices, you have a number of employers who are growing increasingly concerned they'll be able to weather a potential downturn to the economy if it does come."

Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: "When Jamie Dimon talks about loan defaults, I listen. The man has navigated JPMorgan through multiple crises and currently oversees over $3 trillion in assets. His warning signals what many like myself have been seeing on the ground - the post-pandemic sugar high is wearing off."

Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "Covid relief started drying up last year, and what's left is quickly disappearing. Businesses that were propped up by stimulus are now having to face reality, refinancing debt at much higher interest rates or trying to negotiate with creditors."

"But in this environment, refinancing may not even be an option for many. That means we're going to start seeing more defaults, especially from smaller businesses and those in more leveraged sectors."

What Happens Next

JPMorgan and other major financial institutions are expected to release earnings later this month, providing the first concrete look at how market turmoil and tighter credit conditions are affecting business operations.

Meanwhile, Treasury Secretary Scott Bessent is set to meet with international counterparts in a bid to stabilize trade relations.

"Bottom line? We're may or may not be headed for 2008, but we are facing a necessary correction after years of easy money," Ryan said.