JPMorgan's Dimon says U.S. likely in recession

By Joanne Morrison

WASHINGTON (Reuters) - The U.S. is likely in recession already and the housing market is expected to deteriorate further, JPMorgan Chairman and Chief Executive Jamie Dimon told a group of economists here on Wednesday.

"I kind of think we are in one," the head of the nation's third-largest financial institution told the Economic Club of Washington when speaking of the likelihood of a recession. "Financial conditions are getting more extreme," he said citing estimates that housing market could tumble as much as 10 to 25 percent more.

"That would be so unprecedented and it would be really hard to predict the impact," he said, calling steps the Federal Reserve has taken some good steps to help cushion financial markets.

"I think they have been pretty thoughtful," he said of the Fed, adding that more government action may be needed but not in the form of a bailout.

Even so, Dimon predicted that much of the problems in the financial market, particularly the bulk of the needed de-leveraging of these problem loans- is already accomplished.

"The financial side will work through a lot of this...by the end of this year," Dimon said, adding that the rating agencies are not to blame for helping bring on the growing credit crunch.

"Supply and demand will meet. My guess it its about 50 percent done," he said. As for foreign investment in U.S. companies through sovereign wealth funds, Dimon told reporters that such investment should be welcomed. "I think that they should be allowed to invest," he said, but he noted that how much control they should have in U.S. firms is something to be considered.

As for the declining value of the dollar, Dimon cautioned that a growing trade and budget deficit are the cause.