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Jamie Dimon’s Warning: US Economy at Risk as We’ve Been Spending Like Drunken Sailors

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JPMorgan Chase CEO Jamie Dimon Warns of Economic Headwinds

By Maria Bartiromo

Jamie Dimon Sounds Alarm over Economy

JPMorgan Chase CEO Jamie Dimon sounded the alarm over the state of the economy on Monday, warning that the “booming environment” cannot last forever.

Concerns over Headwinds to the Economy

Speaking at the Barclays Global Financial Services Conference in New York, Dimon warned of significant headwinds to the economy, including:

  • Geopolitical tensions
  • Government spending
  • Monetary policy tightening by central banks across the world

“We’ve been spending money like drunken sailors around the world, this war in Ukraine is still going on. Those are really big buts,” he said. “To say the consumer is strong today, meaning you are going to have a booming environment for years, is a huge mistake.”

Dimon’s Skepticism about the Good Times

The steady decline in inflation and the surprisingly resilient labor market have raised the specter among many economists of a “soft landing.” But Dimon remains skeptical the good times will keep coming.

He cited concerns over:

  • The Federal Reserve’s quantitative tightening campaign
  • Increasing reliance on fiscal deficits
  • The downstream impact of the Inflation Reduction Act
  • Global remilitarization
  • Greenification of the economy

Tighter monetary policy works on a lag, meaning that it’s often unclear when higher interest rates actually begin to affect the economy. Dimon seemed to allude to that during the question-and-answer session, noting that business results could change drastically in a year.

Fed’s Efforts to Crush Inflation

Fed policymakers have raised interest rates sharply over the past year, approving 11 rate hikes in hopes of crushing inflation. In the span of just one year, interest rates surged from near zero to above 5%, the fastest pace of tightening since the 1980s.

Officials have signaled that additional rate hikes are on the table this year until there is more substantial evidence that high inflation has retreated for good.

The Fed next meets Sept. 19-20, and is widely expected to hold rates steady at the current 22-year high.

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