JPMorgan's Dimon cautious on global economy
The big bank executive warned of an economic 'hurricane' brewing
JPMorgan Chase CEO Jamie Dimon gave his take on the current state of the economy on Thursday, and listed off a number of factors at play that could determine whether the U.S. will feel a soft or hard landing as the Federal Reserve raises rates in an attempt to rein in soaring inflation.
"The U.S. economy continues to grow and both the job market and consumer spending, and their ability to spend, remain healthy," Dimon said in a statement released with the company's second-quarter results.
"But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity, combined with the war in Ukraine and its harmful effect on global energy and food prices are very likely to have negative consequences on the global economy sometime down the road," the statement continued.
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Dimon warned last month that an economic "hurricane" was on the horizon, but appeared to back off talk of impending doom in his remarks to investors. The CEO was asked during the company's Thursday earnings call, "You're acting like there are sunny skies ahead… so is it tough times or not?"
Dimon then pointed to what he said were a number of positives in the U.S. economy right now, saying that "consumers are in good shape" because "they're spending money, they have more income," and "jobs are plentiful."
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"Businesses, you talk to them, they're in good shape and doing fine," Dimon said. "We've never seen business credit better – ever – like in our lifetimes. And that's the current environment."
"The future environment, which is not that far off, involves rates going up, maybe more than people think because of inflation," he continued. "Maybe stagflation."
"I'm simply saying there's a range of potential outcomes from a soft landing to a hard lending, driven by how much rates go up, the effective quantitative tightening, defective volatile markets, and obviously, this terrible humanitarian crisis in Ukraine and the war and then the effect of that on food and oil and gas," Dimon said.
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He added, "We're simply pointing out those things make the probabilities and possibilities of these events different."