JPMorgan’s Dimon called the economy “booming” Monday, then cited three hidden risks: war, sticky inflation and an unpredictable downturn. The Jamie Dimon economy view came with exactly the “but” people expected.
Speaking at the Wall Street Journal’s Leadership Institute, the JPMorgan Chase chief pointed to higher corporate profits and low unemployment, according to Investing.com’s account of the event. He also warned that geopolitical tensions threaten the wider outlook.
Why the JPMorgan CEO’s Economy Call Is So Upbeat
His case rests on three things. Companies are earning healthy profits. Hardly anyone is out of work. And businesses and households are not borrowing heavily, according to Quartz, which cited the Journal’s coverage.
That last point matters. Booms usually end when too much debt meets a shock. By Dimon’s telling, borrowers are not stretched right now.
That is the reassuring half of his message.
The Catch in Dimon’s Economic Warning: War, Inflation and a Downturn Nobody Can Time
Dimon was just as blunt about what could go wrong. He said a downturn will come eventually. What he can’t say is what will cause it or when. He also said inflation remains sticky.
On war, he noted that the Ukraine conflict has now lasted longer than World War I. “These wars develop in a way that you don’t expect,” he said. He added that they can disrupt populations, alliances and the world economy.
In other words, the Jamie Dimon economy is fine until something unexpected makes it not fine.
Same Message All Month: Deficits, Inflation and Geopolitics
This was no one-off sound bite. Dimon has repeated the warning all month. In his Oct. 13 earnings statement, he said large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and geopolitical conditions “continue to shift under the surface.” JPMorgan’s quarterly numbers came in short of analyst expectations on earnings per share, and we covered that split in how Goldman beat forecasts while JPMorgan missed.
A day later in Chicago, he went further. He said soaring government deficits are a bigger threat to the global economy than inflation or geopolitics, Chicago Business reported.
His warnings are not new, either. In April, he called inflation a possible “skunk at the party.” He also said the Iran war could cause lasting oil and commodity price shocks, CNN reported at the time. For more on the bank’s own numbers, see our rundown of the Q3 bank earnings kickoff.
Dimon on the U.S. Economy: What It Means for Your Wallet
For most households, the takeaway is simple. Jobs are plentiful and company profits are solid, so the foundation looks sturdy today. Older Americans hold much of the wealth, too, and their spending may be propping up the economy.
But the risks Dimon lists show up at the gas pump, in borrowing costs and in the price of groceries.
So which of Dimon’s worries shows up first? He, for one, says he can’t tell you.
