Morgan Stanley’s CEO Sees 50-50 Odds of a Recession Looming

Americans are feeling the burn of inflation at gas pumps and grocery check out lines. Now one executive says that there could be a recession ahead.

According to Morgan Stanley CEO James Gorman, there are 50-50 odds of a recession happening.

“It’s possible we go into recession, obviously, probably 50-50 odds now,” Gorman said Monday at a financial conference held by the bank. That’s up from his earlier 30% recession-risk estimate, said Gorman.

“I don’t think we’re falling into some massive hole over the next few years, I think eventually the Fed will get hold of inflation,” he also noted. “You know that it’s going to be bumpy; people’s 401(k) plans are going to be down this year.”

The CEO says the Fed waited too long to raise rates, which gives them less room to maneuver should a recession begin.

Recently several bank executives have raised alarms about the economy as the Fed raises rates and reverses quantitative easing programs.

JPMorgan CEO Jamie Dimon said he predicted a “hurricane” ahead due to central banks and the Ukraine conflict.

“We’re in sort of a ‘Brave New World’ right now, and I don’t think there’s anybody in this room who could accurately predict where inflation is going to be a year from now,” Gorman said.

“It was inevitable this inflation was not transitory, it was inevitable the Fed would have to move faster than they were projecting,” he said at the US Financials, Payments and CRE conference. “There was a legitimate recession risk. I used to think it was about 30%. It’s probably more like 50% now — it’s not 100%. It behooves you to be a little cautious.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.