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 in the course of the Seventies.
“Sure, I feel there’s an opportunity that may occur once more,” 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 progress and excessive inflation, and Dimon stated such a danger exists once more.
“I fear that it seems extra just like the ’70s than we have seen earlier than,” 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 during which it will look extra just like the ’70s than what we have had for the final 20 years.”
The CEO of the biggest US financial institution has been warning for months about a lot of dangers to a resilient US economic system that would result in “stickier inflation and better charges than markets count on,” 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 several other of his colleagues pivoted from earlier assurances about fee cuts and made it clear that charges had been more likely to keep elevated for longer than anticipated as a consequence 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 eight% or much more” — and he repeated that prediction Tuesday.
“We might deal with stagflation too,” he added.
Earlier this month, JPMorgan reported first quarter outcomes that confirmed greater 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 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 decrease deposit balances.”
Dimon returned to another acquainted topics throughout his dialogue Tuesday, together with his issues 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 identical time, he described the US economic system as “booming” and hailed the resilient state of the American client, US financial institution credit score, dwelling costs, and inventory costs.
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Financial progress, he stated, is vital 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 stated.
He was requested whether or not he can be desirous about serving in authorities, a query he has downplayed a lot of instances previously.
He then repeated a facetious assertion he has made earlier than about his aversion to the election course of: “I all the time stated I might like to be president, however you would need to anoint me.”
He didn’t drop any hints about when he would possibly depart JPMorgan, saying solely that he desires to “depart behind” a “nice firm” and “I wish to assist my nation.”
“I’m very excited in regards to the future.”
David Hollerith is a senior reporter for Yahoo Finance overlaying banking, crypto, and different areas in finance.
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