Home Finance JPMorgan CEO Dimon sums up U.S. economy in one paragraph — and it sounds bad

JPMorgan CEO Dimon sums up U.S. economy in one paragraph — and it sounds bad

by Enochadmin

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

Christophe Morin | Bloomberg | Getty Photos

JPMorgan Chase CEO Jamie Dimon on Thursday summarized the state of the U.S. economic system in a single paragraph, and it is not all good.

On the one hand, Dimon stated the U.S. “economic system continues to develop and each the job market and shopper spending, and their skill to spend, stay wholesome.”

He then rattled off quite a lot of warning indicators, saying: “However geopolitical stress, excessive inflation, waning shopper confidence, the uncertainty about how excessive charges need to go and the never-before-seen quantitative tightening and their results on international liquidity, mixed with the warfare in Ukraine and its dangerous impact on international power and meals costs are very more likely to have destructive penalties on the worldwide economic system someday down the street.”

Dimon’s feedback, which had been made in JPMorgan Chase’s newest quarterly launch, come as buyers and economists attempt to make out whether or not the economic system is headed for a recession — and the latest spate of financial knowledge is not offering a lot readability.

The great

For the second, there are not any indicators the U.S. economic system is getting into a recession, in response to feedback JPMorgan executives made on their earnings name.

As Dimon stated, the labor market appears to be in strong footing. Final month, the U.S. economic system added 372,000 jobs, topping a Dow Jones estimate of 250,000. In the meantime, common hourly wages grew final month at 5.1% year-over-year tempo.

Client spending additionally appears to be chugging alongside, albeit at a subdued tempo. Spending in Could rose 0.2%, under a Reuters estimate for a 0.4% acquire.

Even inside JPMorgan’s personal enterprise there have been indicators of shopper power. Shoppers are nonetheless spending on discretionary areas like journey and eating. At its shopper and group banking division, mixed debit and bank card spending was up 15% within the second quarter. Card loans had been up 16% with continued robust new account originations.

Nevertheless, the excellent news could finish there.

The dangerous

The buyer value index — a extensively adopted measure of inflation — rose final month by 9.1% from the year-earlier interval. That topped a Dow Jones forecast of 8.8% and market the quickest tempo for inflation going again to 1981.

An enormous driver for that improve is a surge in power costs. West Texas Intermediate, the U.S. oil benchmark, is up greater than 28% in in 2022, because the warfare between Ukraine and Russia raises concern over already tight provide available in the market.

Larger costs have additionally dented U.S. shopper sentiment. The College of Michigan’s shopper sentiment index hit a document low final month, tumbling to 50.

These inflationary pressures have pushed the Federal Reserve to tighten financial coverage this yr extra rapidly than buyers anticipated. Final month, the central financial institution hiked charges by 0.75 share level, and a few economists on Wall Avenue anticipate the Fed to hike by as a lot as a full level later in July.

Inflation has additionally had large political ramifications within the U.S.

Based on a ballot carried out by the Pew Analysis Heart, President Joe Biden’s approval ranking has slumped to 37% — with a majority of Individuals saying his insurance policies have made the economic system worse. Pew additionally discovered that simply 13% of Individuals fee U.S. financial situations as “excellent/good.”

Dimon’s remarks observe feedback he made final month through which he warned buyers to brace themselves for an financial “hurricane.”

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