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Unveiling the Reality: From Huge Mistake to the Fallacy of Long-Term Economic Boom

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JPMorgan Chase CEO Jamie Dimon Warns of Risks Ahead for US Economy

Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., speaks during the Institute of International Finance (IIF) annual membership meeting in Washington, DC, US, on Thursday, Oct. 13, 2022.

Ting Shen | Bloomberg | Getty Images

Jamie Dimon’s Warning

JPMorgan Chase CEO Jamie Dimon said Monday that while the U.S. economy is doing well, it would be a “huge mistake” to believe that it will last for years.

Risks Ahead

  • Healthy consumer balance sheets and rising wages are supporting the economy.
  • Risks include central banks reining in liquidity programs, the Ukraine war, and excessive government spending.

Dimon’s Concerns

Dimon, head of the biggest U.S. bank by assets, expressed his concerns during a financial conference in New York.

“To say the consumer is strong today, meaning you are going to have a booming environment for years, is a huge mistake,” he said.

Resilient U.S. Economy

The world’s largest economy has defied expectations for the past year, including from prognosticators like Dimon. Last year, he warned that a potential economic hurricane was on the way, citing the same concerns around central banks and the Ukraine conflict. But the U.S. economy has proven resilient, leading more economists to expect that a recession might be avoided.

Strains in Lending

While JPMorgan and other banks have been “over-earning” on lending for years because of historically low default rates, strains were emerging in parts of real estate and subprime auto lending, Dimon said.

“If and when you have a recession, which you’re eventually going to have, you’ll have a real normal credit cycle,” Dimon said. “In a normal credit cycle, something always does worse than expected,” he added.

Note of Caution

Dimon struck a note of caution throughout the panel discussion. JPMorgan is repurchasing stock at a lower level than before, a pace which might last through 2024, he said.

“I think the uncertainties out there ahead of us are still very large and very dangerous,” Dimon said.

Risks with China

Among those risks is the deterioration in relations with China, he said.

“I don’t expect war in Taiwan, but this can go south,” Dimon said.

This story is developing. Please check back for updates.

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