Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., speaks throughout 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 said Monday that while the U.S. economy is doing well, it could be a “huge mistake” to consider that it will last for years.
Healthy consumer balance sheets and rising wages are supporting the economy for now, but there are risks ahead, said Dimon, who was speaking at a financial conference in Latest York. Topping his concerns include central banks reining in liquidity programs via “quantitative tightening,” the Ukraine war, and governments world wide “spending like drunken sailors,” the chief said.
“To say the patron is robust today, meaning you might be going to have a booming environment for years, is a big mistake,” he said.
The world’s largest economy has defied expectations for a downturn for the past 12 months, including from prognosticators like Dimon, head of the most important U.S. bank by assets. Last 12 months, he warned that a possible economic hurricane was on the best way, citing the identical concerns around central banks and the Ukraine conflict. However the U.S. economy has proven resilient, leading more economists to expect that a recession is perhaps avoided.
“Businesses feel pretty good because they appear at their current results,” Dimon said. “But those things change, and we do not know what the total effect of all that is going to be 12 or 18 months from now.”
While JPMorgan and other banks have been “over-earning” on lending for years due to historically low default rates, strains were emerging in parts of real estate and subprime auto lending, Dimon said.
“If and when you might have a recession, which you are eventually going to have, you’ll need an actual normal credit cycle,” Dimon said. “In a standard credit cycle, something at all times does worse than” expected, he added.
Dimon struck a note of caution throughout the panel discussion. JPMorgan is repurchasing stock at a “lower level” than before, a pace which could last through 2024, he said, because the bank husbands capital to adhere to upcoming rules.
He called the brand new regulatory mandates “hugely disappointing” and pushed for greater transparency from regulators, saying that JPMorgan would have to hold about 30% more capital than European banks.
“Is that what they need? Is that good, long run?” Dimon asked. “What was the goddamn point of Basel in the primary place?”
When asked about whether the IPO and merger markets were picking up given the upcoming Arm listing, Dimon said he encouraged CEOs to take motion quite than waiting too long.
“I think the uncertainties on the market ahead of us are still very large, and really dangerous,” Dimon said.
Amongst those risks is the deterioration in relations with China, he said. Prospects for JPMorgan operations in China went from looking shiny to only “just okay” due to rising risks, he said.
“I do not expect war in Taiwan, but this could go south,” Dimon said.