According to Jeff Gundlach, 2023 promises to be a turbulent year for the economy.

Markets Insider/Harry Robertson and Vicky Ge Huang
‘Bond King’ Jeff Gundlach sees a potential ‘calamity’ coming for markets in 2023 as recession hits the US

DoubleLine Capital CEO Jeff Gundlach has said a “calamity” is potentially coming for markets in 2023 and that he thinks a recession  is likely to hit the US economy.

Speaking at the Exchange ETF conference in Miami, Gundlach said: “I would say there’s potentially a calamity coming in 2023.”

He said he doesn’t expect a recession to come this year, but said he’s on the lookout after the inversion of 2-year and 10-year US bond yield, which is traditionally a warning sign for the economy.

“I’m not looking for a recession this year because it takes time,” he told the conference in the keynote speech. Gundlach later told CNBC that the recession “might not be until 2023.”

Gundlach, nicknamed the ‘Bond King’ for his successful career in fixed income, has long warned the Federal Reserve has let inflation get out of control. And he has cautioned that sharp interest rate rises are likely to dent the economy.

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CNBC/Hugh Son
Jamie Dimon sees ‘storm clouds’ ahead for U.S. economy later this year

The risk that the Federal Reserve accidentally tips the U.S. economy into recession as it combats inflation is rising, according to JPMorgan Chase CEO Jamie Dimon.

The CEO of the biggest U.S. bank by assets said Wednesday that economic growth will continue at least through the second and third quarters of this year, fueled by consumers and businesses flush with cash and paying off debts on time.

“After that, it’s hard to predict. You’ve got two other very large countervailing factors which you guys are all completely aware of,” Dimon told analysts, naming inflation and quantitative tightening, or the reversal of Fed bond-buying policies. “You’ve never seen that before. I’m simply pointing out that those are storm clouds on the horizon that may disappear, they may not.”

Dimon’s remarks show just how quickly major events can change the economic landscape. A year ago, he said the U.S. was enjoying an economic “Goldilocks moment” of high growth coupled with manageable inflation that could last through 2023. But stubbornly high inflation and a host of possible impacts from Russia’s invasion of Ukraine have clouded that picture.

The risks spilled into view on Wednesday, when JPMorgan posted a 42% profit decline from a year earlier on increased costs for bad loans and market upheaval caused by the Ukraine war.

Specifically, the bank took a $902 million charge for building loan loss reserves, a stark reversal from a year ago, when it released $5.2 billion in reserves.

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Fox Business/Megan Henney
Inflation gave most Americans a 2.7% salary cut in March

The tightest labor market in years is fueling rapid wage gains for most workers – the only problem is that red-hot inflation is quickly eroding those increases. 

The Labor Department reported on Tuesday that average hourly earnings for all employees actually declined 2.7% in March from the same month a year ago when factoring in the impact of rising consumer prices. On a monthly basis, average hourly earnings tumbled by 0.8% in March, when factoring in the 1.2% inflation spike.

By that measure, the typical U.S. worker is actually worse off today than they were a year ago, even though nominal wages are rising at the fastest pace in years. That’s because inflation is also surging.

The government said in a separate report on Tuesday that the consumer price index – which measures a basket of goods including gasoline, health care, groceries and rents – rose 8.5% in March from a year ago, the fastest pace since December 1981. Prices jumped 1.2% in the one-month period from February, the largest month-to-month jump since 2005.

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