Jamie Dimon is bullish on the US economy, at least for years to come.
Dimon, the longtime CEO and chairman of JPMorgan Chase, sees strong growth ahead of the world’s largest economy, thanks to the U.S. government’s response to the coronavirus pandemic that has left many consumers in awe. the height of the savings, according to its annual shareholders ’letter.
“I have little doubt that with excessive savings, new stimulus savings, huge deficit spending, more QE, a potential new infrastructure bill, a successful vaccine and euphoria at the end of the pandemic, probably the economy of the United States will prosper, “Dimon said in the letter. “This boom could easily come in 2023 because all spending could be extended to 2023.”
Dimon, who managed JPMorgan through the 2008 financial crisis, helping to create the largest U.S. bank by assets, noted that the magnitude of government spending during the pandemic far exceeds the response to the previous crisis. The long-term impact of the reopening boom will not be known until years into the future, he said, because it will take time to determine the quality of government spending, including the $ 2 trillion infrastructure proposal. of President Joe Biden.
“Once spent prudently, it will create more economic opportunities for everyone,” he said.
Dimon, 65, delved into a number of familiar topics for observers of the country’s leading banker: he promoted JPMorgan’s efforts to create economic opportunities for Americans who have lagged behind, highlighted the threats to the dominance of American banks by fintech and Big Tech technology players, and opined on public policies and the role of companies in helping to bring about change.
While Dimon described stock market valuations as “quite high,” he said a multi-year boom may justify current levels, as markets are priced in economic growth and in excess savings that open up in equities. . He said there was “some foam and speculation” in some parts of the market, but did not say where exactly.
“By contrast, in this boom scenario it’s hard to justify the price of U.S. debt (most people consider the ten-year bond to be the key benchmark for U.S. debt),” Dimon said. “This is due to two factors: first, the huge supply of debt that needs to be absorbed; and second, the unreasonable possibility that an increase in inflation is not just temporary.”
While he is optimistic about the immediate future of the economy, there are serious challenges ahead for the United States, Dimon said. The country has been tested before, although there are conflicts that begin with the Civil War, the Great Depression and the social upheaval of the 1960s and 1970s, he said.
“In each case, the strength and resilience of the United States strengthened our position in the world, especially in relation to our major international competitors,” Dimon said. “This time it may be different.”
Last year he highlighted the challenges for U.S. institutions, elected officials, and families, as our country’s rivals see a “nation torn apart and paralyzed by politics, as well as racial and income inequality. , and a country incapable of coordinating government policies (fiscal, monetary, industrial), regulatory) in any coherent way to achieve national goals. “
The country, ultimately, must “overcome our differences and self-interest and act for the greater good,” Dimon said. “The good news is that this can be fixed.”
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