Jamie Dimon is bullish on the US economy – at least for the next few years.
Dimon, the longtime CEO and chairman of JPMorgan Chase, sees strong growth ahead for the world’s largest economy thanks to the U.S. government’s response to the coronavirus pandemic, which has left many consumers with savings, according to his annual shareholder letter.
“I have no doubt that with excess savings, new stimulus savings, huge deficits, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the US economy is likely to boom,”
Dimon, who led JPMorgan through the 2008 financial crisis and helped create the largest U.S. bank by assets, pointed out that the size of government spending during the pandemic far exceeds the response to the previous crisis. The long-term impact of the reconstruction boom will not be known until years into the future, he said, because it will take time to determine the quality of public spending, including President Joe Biden’s proposed $ 2 trillion infrastructure bill.
“Used wisely, it will create more economic opportunity for everyone,” he said.
Dimon, 65, weighed in on a number of topics known to overseers of the country’s most prominent banker: He promoted JPMorgan’s efforts to create economic opportunities for Americans who have been left behind, highlighted threats to US bank dominance from fintech and Big Tech players and commented on public order and the role of companies in helping to create change.
While Dimon called stock market values ”quite high”, he said a multi-year boom could justify current levels because markets price economic growth and excess savings that find their way into stocks. He said there was “some foam and speculation” in parts of the market, but did not say how accurate.
“Conversely, in this boom scenario, it is difficult to justify the price of U.S. debt (most consider the 10-year bond to be the most important benchmark for U.S. debt),” Dimon said. “This is due to two factors: firstly, the huge supply of debt to be absorbed and, secondly, the not unreasonable possibility that a rise in inflation will not just be temporary.”
While he is bullish on the immediate future of the economy, there are serious challenges for the United States, Dimon said. The country has been tested before – though conflicts starting with the civil war, the Great Depression and the societal upheaval of the 1960s and 1970s, he said.
“In either case, America’s strength and resilience strengthen our position in the world, especially in relation to our major international competitors,” Dimon said. “This time may be different.”
The past year highlighted challenges for US institutions, elected officials and families, as our country’s rivals see a “nation torn and paralyzed by politics as well as racial and income inequality – and a country unable to coordinate government policy (fiscal policy). “monetary, industrial, regulatory) in any coherent way to achieve national objectives.”
The country ultimately needs to “move beyond our disagreements and self-interest and act for the better,” Dimon said. “The good news is that this can be resolved.”
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