"We think (the recession) could be deep; we don't know how deep," Dimon said. "We think the economy could be worse than the capital markets crisis."
He said the government's actions to pump cash into the financial system have been "powerful medicine" to help fix the dislocated financial markets. But even an eventual normalization in the markets "may not stop us from having a deep recession," Dimon said.
Many people still can't get financing, he said. And the troubles are so widespread that companies all over the world are stuck with bad investments on their hands and running for cover. Referring to billionaire investor Warren Buffett's adage about finding out who's been swimming naked when the tide goes out, Dimon said: "There are people swimming naked everywhere."
Financial institutions around the world have been slammed by both deteriorating consumer credit and turbulent financial markets.
JPMorgan Chase on Wednesday ratcheted up its expectations for losses from deteriorating home equity loans. The bank's home equity loan losses could rise as high as $850 million over the next several quarters, Dimon said. That was up from last month's forecast of losses of as much as $800 million in the coming quarters.
Expectations for losses from other loans - credit cards, subprime mortgages and prime mortgages - were the same as on Oct. 15, when JPMorgan reported an 84 percent drop in third-quarter earnings.
The bank anticipates credit card loss rates of about 5 percent in the fourth quarter, 6 percent at the beginning of 2009, and 7 percent by the end of 2009. It also expects subprime mortgage quarterly losses as high as $425 million in early 2009, and prime mortgage quarterly losses as high as $300 million.
"We have tightened consumer lending considerably," Dimon said at Merrill Lynch's banking and financial services conference in New York. He added, though, "We're still lending. We're still in business."
JPMorgan Chase shares fell $1.70, or 4.7 percent, to $34.65, Wednesday in afternoon trading.