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Jamie Dimon is worried the US economy is headed back to the 1970s

In Business
April 23, 2024

JPMorgan Chase (JPM) CEO Jamie Dimon is concerned the US economy could be in for a repeat of the problems that hampered the country during the 1970s.

“Yes, I think there’s a chance that can happen again,” he said during an appearance Tuesday at the Economic Club of New York.

The economy in that troubled decade was constrained by stagflation, a combination of low growth and high inflation, and Dimon said such a risk exists again.

“I worry that it looks more like the seventies than we’ve seen before,” he added during a question-and-answer session with Marie-Josee Kravis, chair of the Museum of Modern Art and wife of KKR co-founder Henry Kravis.

“There are circumstances in which it’ll look more like the seventies than what we’ve had for the last 20 years.”

Jamie Dimon, Chairman and Chief Executive officer (CEO) of JPMorgan Chase & Co. (JPM) speaks to the Economic Club of New York in Manhattan in New York City, U.S., April 23, 2024. REUTERS/Mike Segar

Jamie Dimon during an appearance at the Economic Club of New York in Manhattan. REUTERS/Mike Segar (REUTERS / Reuters)

The CEO of the largest US bank has been warning for months about a number of risks to a resilient US economy that could lead to “stickier inflation and higher rates than markets expect,” as he put it in an April 8th letter to shareholders.

Federal Reserve officials backed up that view in the last week as Fed Chair Jerome Powell and several of his colleagues pivoted from earlier assurances about rate cuts and made it clear that rates were likely to stay elevated for longer than expected due to hotter-than-expected inflation.

Dimon said in his April 8th letter that the bank is prepared for interest rates “from 2% to 8% or even more” — and he repeated that prediction Tuesday.

“We would handle stagflation too,” he added.

Earlier this month, JPMorgan reported first quarter results that showed higher interest rates are posing more of a challenge even for the country’s largest bank.

Despite posting profits that rose 6% from a year earlier, beating analyst expectations, the bank said a key revenue source known as net interest income came in lower than expected from the previous quarter.

It was the bank’s first sequential drop in that key revenue source in nearly three years and it attributed the decrease to “deposit margin compression and lower deposit balances.”

FILE - Pedestrians approach JPMorgan Chase headquarters on Dec. 29, 2023, in New York. JP Morgan reports earnings on Friday, April 12, 2024. (AP Photo/Peter Morgan, File)

Pedestrians approach JPMorgan Chase headquarters in New York. (AP Photo/Peter Morgan, File) (ASSOCIATED PRESS)

Dimon returned to some other familiar subjects during his discussion Tuesday, from his concerns about large amounts of government spending and efforts by the Fed to shrink its balance sheet as well as the ongoing wars in the Middle East and Ukraine and their potential to disrupt essential commodities markets, migration, and geopolitical relationships.

At the same time, he Dimon described the US economy as “booming” and hailed the resilient state of the American consumer, US bank credit, home prices and stock prices.

Economic growth, he said, is key to solving any number of problems.

“We need to do more and better and that’s why we need to grow the economy,” he said.

Dimon also described the US economy as “booming,” ticking of the resilient state of the American consumer, US bank credit, home prices and stock prices.

He was asked whether he would be interested in serving in government, a question he has downplayed a number of times in the past.

He then repeated a facetious statement he has made before about his aversion to the election process: “I always said I would love to be president but you would have to anoint me.”

He didn’t drop any hints about when he might leave JPMorgan, saying only that he wants to “leave behind” a “great company” and “I want to help my country.”

“I am very excited about the future.”

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

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