Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., speaks during the Institute of International Finance (IIF) annual membership meeting in Washington, DC, US, on Thursday, Oct. 13, 2022.
Ting Shen | Bloomberg | Getty Images
JPMorgan Chase CEO Jamie Dimon warned that although the U.S. economy is currently performing well, it would be a “huge mistake” to assume that this positive trend will continue indefinitely.
Dimon highlighted that for now, the economy is being supported by healthy consumer balance sheets and rising wages. However, he identified various potential risks on the horizon, including the reduction of liquidity programs by central banks, the ongoing Ukraine war, and excessive government spending across the globe. According to Dimon, relying on the strength of today’s consumer to predict a thriving economic environment for years to come is a severe error in judgment.
Contrary to expectations, the world’s largest economy has managed to avoid a downturn over the past year, defying forecasts from experts like Dimon, who heads the largest U.S. bank in terms of assets. While Dimon had previously warned of an impending economic storm due to the same concerns about central banks and the Ukraine conflict, the U.S. economy has displayed resilience. This has led more economists to believe that a recession might be evaded.
“Businesses currently appear to be in good shape based on their present results,” remarked Dimon. “However, these circumstances can change, and we cannot predict the full impact of these changes 12 or 18 months from now.”
Dimon acknowledged that while JPMorgan and other banks have been profiting from lending for years due to historically low default rates, signs of strain are emerging in certain sectors such as real estate and subprime auto lending.
“Inevitably, there will be a recession, and during that time, we will experience a typical credit cycle,” Dimon stated. “In a normal credit cycle, something always performs worse than initially anticipated.”
Throughout the panel discussion, Dimon maintained a cautious tone. He disclosed that JPMorgan is currently repurchasing stock at a reduced rate and expects this pace to continue until 2024. This strategy allows the bank to conserve capital for future compliance with upcoming regulations.
Furthermore, he expressed disappointment with new regulatory mandates and called for greater transparency from regulators. Dimon emphasized that JPMorgan would need to hold around 30% more capital than European banks.
“Is this really what they want? Is it beneficial in the long term?” Dimon questioned. “What was the purpose of Basel in the first place?”
When questioned about the state of the IPO and merger markets in light of the upcoming Arm listing, Dimon advised CEOs to take action promptly instead of waiting for too long.
“The uncertainties we face ahead are still significant and perilous,” cautioned Dimon.
One of the risks he highlighted is the deterioration of relations with China. Dimon explained that the prospects for JPMorgan’s operations in China have shifted from promising to merely “acceptable” due to increasing risks.
“While I do not anticipate a war in Taiwan, the situation can escalate,” Dimon asserted.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
