Even though the U.S. economy is doing fairly well, it would be a “huge mistake” to think these gains will multiply or are here to stay, said JPMorgan Chase & Co. CEO Jamie Dimon on Monday.
Dimon claimed there are risks ahead that will challenge rising wages and robust consumption balance sheets. “To say the consumer is strong today, meaning you are going to have a booming environment for years, is a huge mistake,” he said.
His comments were made at the Barclays Global Financial Services Conference. Dimon’s talk ranged from the Ukraine War to central banks engaging in quantitative tightening to his characterization of governments around the world “spending like drunken sailors,” according to CNBC.
$JPM CEO Jamie Dimon talking about the state of the consumer just now:
"I'll tell you about the consumer, but there's a big but…it's pretty good…to say the consumer is strong today, meaning you're going to have a booming environment for years, is a huge mistake" pic.twitter.com/Xu2uy8tRIK
— The Transcript (@TheTranscript_) September 11, 2023
Last year, Dimon claimed there was an economic “hurricane” on the way caused by central banks like the Federal Reserve and the Russo-Ukraine War. But this never came to pass, and has convinced some economists that there will not be a recession after all but rather a “soft landing.”
Optimistic economists at the American Banking Association (ABA), a trade association for banking industry, highlighted the enduring labor market and the first increase in incomes in a years, adjusted for inflation. Additionally, ABA says there is reason to believe that the Federal Reserve will not have to raise interest rates further and could even begin cutting them by next year. These are signs that consumer spending will continue unimpeded and a recession will be avoided, even if other indicators are less than ideal.
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Simona Mocuta, chair of ABA’s economic advisory committee and chief economist at State Street Global Advisors, affirmed the economists’ findings: “Given both demonstrated and anticipated progress on inflation, the majority of the committee members believe that the Fed’s tightening cycle has run its course.” But she acknowledged there was room for skepticism, adding, “However, the battle against inflation is not yet won, so the Fed must remain vigilant.”
Dimon is insisting on his original message, saying the relative health of the economy is temporary. “Businesses feel pretty good because they look at their current results,” Dimon said. “But those things change, and we don’t know what the full effect of all this is going to be 12 or 18 months from now.”
Dimon expressed his concern that “very large, and very dangerous” uncertainties haunt the economic future, among them being a breakdown in Western relations with China. JPMorgan’s prospective dealings with China have declined from their previous optimistic outlook, he said, noting, “I don’t expect war in Taiwan, but this can go south.”
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