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Thursday, August 18, 2022

JPMorgan CEO Dimon summarizes the US economy in one paragraph – and that sounds bad

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Jamie Dimon, chief executive officer of JPMorgan Chase & Co.

Christophe Morin | Bloomberg | beautiful pictures

JPMorgan Chase CEO Jamie Dimon Thursday summed up the state of the US economy in one paragraph, and it’s not all good.

On the one hand, Dimon said the US economy “continues to grow and both the job market and consumer spending and their ability to spend remain healthy.”

He then offered some warning signs: “But geopolitical tensions, high inflation, dwindling consumer confidence, uncertainty over where high interest rates have to go, and a tightening unprecedented amounts and their impact on global liquidity, combined with the war in Ukraine and its deleterious impact on global food and energy prices is likely to have consequences. negative consequences for the global economy at some point.”

Dimon commented, made in the latest quarterly release of JPMorgan Chasecome as investors and economists try to figure out if the economy is headed for a recession – and the recent series of economic data doesn’t provide much clarity.


Consumer spending also appears to be declining, albeit at a slower rate. Spending in May rose 0.2 percent, below Reuters estimates for a 0.4 percent increase.

Even in JPMorgan’s business there are signs of consumer strength. Consumers are still spending on discretionary sectors like travel and dining. At the consumer and community banking division, combined spending on debit and credit cards increased 15% in the second quarter. Card loans grew 16% with new account funding continuing to be strong.

However, the good news may end there.

Bad people

Consumer Price Index – a widely watched measure of inflation – last month increased by 9.1% over the same period last year. That number topped the Dow Jones forecast of 8.8% and brought to market the fastest rate of inflation since 1981.

A big driver for that increase is soaring energy prices. West Texas Intermediate, the US oil benchmark, is up more than 28% in 2022, as the war between Ukraine and Russia raises concerns about already tight supplies in the market.

Higher prices have also affected US consumer sentiment. The University of Michigan’s consumer sentiment index hit a record low last month, acrobatics to 50.

These inflationary pressures have prompted the Federal Reserve to tighten monetary policy this year faster than investors expected. Last month, the central bank raised interest rates by 0.75 percentage points, and some Wall Street economists expect the Fed to raise rates by as much as one point by the end of July.

Inflation has also had major political ramifications in the US

According to a poll conducted by the Pew Research Center, President Joe Biden’s approval rate has dropped to 37% – with the majority of Americans saying his policies have made the economy worse. Pew also found that only 13% of Americans rate US economic conditions as “excellent / good. “

Dimon’s comments follow comments he made last month in which he warned investors to prepare for an economy “storm. “

Ordered to CNBC PRO for exclusive insights and analysis, as well as live coverage of the business day from around the world.

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I am passionate about journalism and using new technology to spread news. I am also interested in politics and economics, and I am always looking for ways to make a difference in the world. I am the CEO of Janaseva News, and I am 24 years old.

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