Jamie Dimon is optimistic about the US economy – at least for the next few years.
Dimon, CEO and long-time chairman of JPMorgan Chase, sees strong growth for the world’s largest economy, thanks to the US government’s response to the coronavirus pandemic that has left many consumers in the lurch, according to its annual shareholders’ letter.
“I have no doubt that with excessive savings, new incentive savings, huge deficit spending, more QE, a potential new infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the US economy is likely to grow.” Dimon said in the letter. “This boom could easily reach 2023, as all spending could be extended to 2023.”
Dimon, who managed JPMorgan through the 2008 financial crisis, helping to create the largest bank in the US through assets, pointed out that the extent of government spending during the pandemic far exceeds the response to that previous crisis. The longer-term impact of increasing reopening will not be known until the next few years, he said, as it will take time to see the quality of government spending, including the infrastructure bill proposed by President Joe Biden on 2 trillions of dollars.
“Wisely spent, it will create more economic opportunities for everyone,” he said.
Dimon, 65, looked at a number of topics familiar to observers of the country’s most prominent banker: he promoted JPMorgan’s efforts to create economic opportunities for lagging Americans, highlighted threats to the dominance of American banks in the side of fintech and Big Tech players. and commented on public policy and the role of corporations in contributing to change.
While Dimon called the stock market valuations “quite high”, he said that a multi-year increase could justify the current levels, as the markets set prices in economic growth and excess savings that take place in stocks. He said there was “some foam and speculation” in some parts of the market, but did not say where.
“On the contrary, in this boom scenario it is difficult to justify the price of US debt (most people consider the 10-year bond as the key benchmark for US debt),” Dimon said. “This is due to two factors: firstly, the huge supply of debt that needs to be absorbed; and secondly, the unreasonable possibility that an increase in inflation will not be only temporary.”
Although he is optimistic about the immediate future of the economy, there are serious challenges for the United States, Dimon said. The country has been tested before – although conflicts since the Civil War, the Great Depression and the societal upheaval of the 1960s and 1970s, he said.
“In each case, America’s strength and resilience have strengthened our position in the world, especially relative to our main international competitors,” Dimon said. “This time it may be different.”
Last year highlighted challenges for American institutions, elected officials and families, as our country’s rivals see a “nation torn apart by politics, as well as racial and income inequalities – and a country unable to coordinate government policies (fiscal, monetary, industrial). . , regulatory) in any coherent way to achieve national objectives. “
The country must ultimately “go beyond our differences and self-interest and act for the greater good,” Dimon said. “The good news is that this can be fixed.”
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