JPMorgan Chase (JPM) CEO Jamie Dimon is anxious the US economic system could possibly be in for a repeat of the issues that hampered the nation in the course of the Nineteen Seventies.
“Sure, I believe there’s an opportunity that may occur once more,” he mentioned throughout an look Tuesday on the Financial Membership of New York.
The economic system in that troubled decade was constrained by stagflation, a mix of low development and excessive inflation, and Dimon mentioned such a danger exists once more.
“I fear that it seems extra just like the seventies than we have seen earlier than,” he added throughout a question-and-answer session with Marie-Josee Kravis, chair of the Museum of Trendy Artwork and spouse of KKR co-founder Henry Kravis.
“There are circumstances through which it’s going to look extra just like the seventies than what we have had for the final 20 years.”
The CEO of the most important US financial institution has been warning for months about quite a lot of dangers to a resilient US economic system that would result in “stickier inflation and better charges than markets anticipate,” as he put it in an April eighth letter to shareholders.
Federal Reserve officers backed up that view within the final week as Fed Chair Jerome Powell and several other of his colleagues pivoted from earlier assurances about fee cuts and made it clear that charges have been more likely to keep elevated for longer than anticipated on account of hotter-than-expected inflation.
Dimon mentioned in his April eighth letter that the financial institution is ready for rates of interest “from 2% to eight% or much more” — and he repeated that prediction Tuesday.
“We’d deal with stagflation too,” he added.
Earlier this month, JPMorgan reported first quarter outcomes that confirmed increased rates of interest are posing extra of a problem even for the nation’s largest financial institution.
Regardless of posting income that rose 6% from a 12 months earlier, beating analyst expectations, the financial institution mentioned a key income supply often known as internet curiosity earnings got here in decrease than anticipated from the earlier quarter.
It was the financial institution’s first sequential drop in that key income supply in practically three years and it attributed the lower to “deposit margin compression and decrease deposit balances.”
Dimon returned to another acquainted topics throughout his dialogue Tuesday, from his considerations about giant quantities of presidency spending and efforts by the Fed to shrink its steadiness sheet in addition to the continuing wars within the Center East and Ukraine and their potential to disrupt important commodities markets, migration, and geopolitical relationships.
On the similar time, he Dimon described the US economic system as “booming” and hailed the resilient state of the American shopper, US financial institution credit score, residence costs and inventory costs.
Financial development, he mentioned, is essential to fixing any variety of issues.
“We have to do extra and higher and that is why we have to develop the economic system,” he mentioned.
Dimon additionally described the US economic system as “booming,” ticking of the resilient state of the American shopper, US financial institution credit score, residence costs and inventory costs.
He was requested whether or not he could be eager about serving in authorities, a query he has downplayed quite a lot of occasions previously.
He then repeated a facetious assertion he has made earlier than about his aversion to the election course of: “I all the time mentioned I’d like to be president however you would need to anoint me.”
He didn’t drop any hints about when he would possibly go away JPMorgan, saying solely that he needs to “go away behind” a “nice firm” and “I need to assist my nation.”
“I’m very excited in regards to the future.”
David Hollerith is a senior reporter for Yahoo Finance protecting banking, crypto, and different areas in finance.
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