JPMorgan Chase (JPM) CEO Jamie Dimon is worried the US economic system could possibly be in for a repeat of the issues that hampered the nation through the Nineteen Seventies.
“Yes, I think there’s a chance that can happen again,” he stated throughout an look Tuesday on the Financial Membership of New York.
The economic system in that troubled decade was constrained by stagflation, a mixture of low development and excessive inflation, and Dimon stated such a threat exists once more.
“I worry that it looks more like the ’70s than we’ve seen before,” he added throughout a query and reply session with Marie-Josée Kravis, chair of the Museum of Fashionable Artwork and spouse of KKR co-founder Henry Kravis.
“There are circumstances in which it’ll look more like the ’70s than what we’ve had for the last 20 years.”
The CEO of the biggest US financial institution has been warning for months about quite a few dangers to a resilient US economic system that would result in “stickier inflation and higher rates than markets expect,” as he put it in an April 8 letter to shareholders.
Federal Reserve officers backed up that view within the final week as Fed Chair Jerome Powell and a number of other of his colleagues pivoted from earlier assurances about price cuts and made it clear that charges have been prone to keep elevated for longer than anticipated as a result of hotter-than-expected inflation.
Dimon stated in his April 8 letter that the financial institution is ready for rates of interest “from 2% to 8% or even more” — and he repeated that prediction Tuesday.
“We would handle stagflation too,” he added.
Earlier this month, JPMorgan reported first quarter outcomes that confirmed larger rates of interest are posing extra of a problem even for the nation’s largest financial institution.
Regardless of posting earnings that rose 6% from a yr earlier, beating analyst expectations, the financial institution stated a key income supply often called 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 the financial institution attributed the lower to “deposit margin compression and lower deposit balances.”
Dimon returned to another acquainted topics throughout his dialogue Tuesday, together with his issues about massive quantities of presidency spending and efforts by the Fed to shrink its steadiness sheet, in addition to the continued wars within the Center East and Ukraine and their potential to disrupt important commodities markets, migration, and geopolitical relationships.
On the similar time, he described the US economic system as “booming” and hailed the resilient state of the American client, US financial institution credit score, house costs, and inventory costs.
Financial development, he stated, is vital to fixing any variety of issues.
“We need to do more and better, and that’s why we need to grow the economy,” he stated.
He was requested whether or not he can be excited by serving in authorities, a query he has downplayed quite a few occasions prior to now.
He then repeated a facetious assertion he has made earlier than about his aversion to the election course of: “I always said I would love to be president, but you would have to anoint me.”
He didn’t drop any hints about when he would possibly depart JPMorgan, saying solely that he desires to “leave behind” a “great company” and “I want to help my country.”
“I am very excited about the future.”
David Hollerith is a senior reporter for Yahoo Finance overlaying banking, crypto, and different areas in finance.
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