Trillions of dollars in government stimulus aimed at blunting the financial pain caused by the coronavirus pandemic is poised to create a years-long economic boon if spent wisely, according to JPMorgan Chase CEO Jamie Dimon.
"We believe that the economy has the potential to have extremely robust, multi-year growth," Dimon wrote in JPMorgan’s first-quarter earnings report, which was released Wednesday morning.
The head of the nation's biggest bank said the $1.9 trillion relief package, known as the American Rescue Plan, that President Biden signed into law in mid-March has left consumers flush with cash. The measure sent most Americans a third stimulus check worth $1,400, boosted unemployment benefits at $300 a week through September and expanded the child tax credit.
Other stimulus spending, including continued quantitative easing by the Federal Reserve and a potential multitrillion-dollar infrastructure package, could create the type of economic growth that "benefits all Americans, particularly those who suffered the most during the pandemic," Dimon wrote.
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Dimon's comments come as Biden is pushing forward with a $2.3 trillion spending initiative that would make massive investments in the nation's roads and bridges, as well as its transit systems, schools, water systems and hospitals. The measure would be paid for by raising the corporate tax rate to 28% from 21% and raising the global minimum tax rate to 21% from about 13%.
"If all of the government programs are spent wisely and efficiently, focusing on actual outcomes, the benefits will be more widely shared, economic growth will be more sustainable and future problems, like inflation and too much debt, will be reduced," he added.
During a call with reporters, Dimon estimated that Americans have roughly $2 trillion more in cash in their checking accounts than before the pandemic.
"What happened is, the consumer has so much money, they’re paying down their credit card loans, which is good," he said. "Their balance sheet is in excellent, outstanding shape – coiled, ready to go and they’re starting to spend money."
Many Americans have received three cash payments from the federal government in addition to enhanced jobless aid, helping to stave off a potentially cataclysmic downturn for millions of people.
JPMorgan CFO Jennifer Piepszak said that Americans have been saving about 30% of their stimulus checks from each round.
"We expect the recovery to be robust in the second half of the year," she said.