Most people are in good financial health, but economic and geopolitical threats could spoil the party, Jamie Dimon warned Tuesday.
Consumers have seen the value of their homes and stock portfolios rise in recent years, and they are spending a historically low percentage of their income on paying down debt, JPMorgan’s CEO told the Economic Club of New York. York.
People are also benefiting from strong economic growth and near-record employment rates, but they won’t be immune if disaster strikes, Dimon said.
“Even though we are entering a recession, the consumer is doing well,” he said in an excerpt of the interview published by Bloomberg. “That doesn’t mean that we can fight against the effects of stagflation, something like that, if the situation gets worse.”
“So far we’re in pretty good shape, and so far it looks like a soft landing type scenario, but that puts me on the cautious side,” he added.
Dimon’s cautious comments speak to the bleak outlook for the economy.
Inflation has fallen from a 40-year high of more than 9% in the summer of 2022 to less than 4% in recent months, but remains well above the Federal Reserve’s 2% target.
The US central bank raised interest rates from near zero to over 5%, but has not reversed the hikes until it is sure inflation is under control, and may even raise them again. if prices started to rise again.
Higher borrowing costs discourage spending, hiring and investment, and tend to depress asset prices, which can help curb inflation but can also stifle economic growth to the point that a recession sets in.
Dimon highlighted the far-reaching effects that further hikes and an economic slowdown could have, the Economic Club of New York said in a statement. Message: “If rates rise and you have a #recession, it will hurt indebted businesses, jobs, profits and real estate. So you may have circumstances where it’s a triple whammy that negatively affects # banks.”
“A little chaos”
The Wall Street heavyweight also highlighted the dire situation the world finds itself in, echoing his recent annual letter and comments on JPMorgan’s first-quarter earnings call.
“The geopolitical situation is probably the most complicated and dangerous since World War II,” he said, highlighting tensions between the United States and China as well as conflicts between Russia and Ukraine and in the Middle-East.
Dimon highlighted the impact that foreign conflicts can have on oil and gas prices, international trade and military relations, and how these effects can disproportionately harm poorer countries.
He added that the world order is “being called into question” and could descend into “a little chaos” as it realigns.
Dimon, a vocal skeptic of Bitcoin and other cryptocurrencies, threw a new photo at them, according to the Club. X flow: “Blockchain is real, we use it, but we’ve been talking about #crypto for 10 years and not much has come of it.”
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