Jamie Dimon believes the U.S. economy could be in for a near-Goldilocks trend.
“To start, we are going to have a hugely strong economy, and it’s probably going to go well into 2022, and maybe 2023, because of $7 trillion dollars of spending—a lot of which, some has been spent but a lot has not been spent,” the JPMorgan Chase CEO and economic authority said Tuesday during a WSJ CEO Council interview.
In a wide-ranging discussion, Dimon addressed topics from the economy to small business after the pandemic to what a return to work could look like.
“The consumer’s in great shape. Consumers are going back to work, their balance sheet is in great shape, home prices are up, their debt levels are low, completely different than in the Great Recession,” he said. During that crash, consumers, Wall Street and financial institutions all sold off assets to minimize and manage their debt, Dimon said. By contrast, today’s companies are good shape, with $2 trillion dollars in excess cash offsetting their debt, he noted.
Meanwhile, vaccinations are moving the nation closer to normalcy.
“People are dying to get out and go back to work. You see it every day. You are going to have a boom and my reference to Goldilocks is more about that, that if we’re lucky, it’ll be a boom and inflation will go up not too much and rates go up not too much and everything will be fine,” Dimon said.
For now, “everyone should enjoy” a boom in jobs and economic growth, Dimon said, cautioning that if inflation goes up too high and too fast, that’s when the Federal Reserve will need to be reactive.
Though not a fan of Bitcoin because it’s not yet asset-backed, Dimon said that blockchain is “real, we use it, and you will have digital currencies which are 100 percent backed by actual assets or stock, bonds.” He reminded viewers that “currency is supported by the taxing authority of a country, the military authority, the rule of law, Central Bank,” all of which are meant to preserve the currency’s value. Still, JPMorgan is now offering crypto products because that’s what clients are interested in. Digital payments, already growing before the pandemic, were thrust into the mainstream and show little sign of subsiding, Dimon added.
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When it comes to small businesses, Dimon said the Federal Reserve and government did all the right things, “moving quickly because it could have gotten a lot worse.” Previously at 15 percent, unemployment has now dropped to 6 percent. And while many small businesses have had to close up shop, Dimon believes many shops and restaurants will return.
“People need money to do it, but I do think that’s where the suffering took place. And the job loss was also all at the lower end, and we should recognize that in an average recession job losses are through the whole income spectrum. This [time], most of the job losses were at the bottom 30 percent, which also relates to retail stores, hospitality,” Dimon said.
The travel sector is roaring back to life, with bookings today higher than 2019 levels, Dimon pointed out. “Things are coming back,” he said. Hotel activity is outpacing air as “people are going to travel locally as opposed to internationally.”
In a letter to shareholders, Dimon addressed social and income inequality, which he elaborated on during the interview.
“I’m not critical of government per se. I’m critical of our failures as a society and you can blame voters and business,” he said, noting that “we don’t do infrastructure well, immigration well, regulation well….” The chief executive took aim at all kinds of regulations—OSHA, workers compensation, local and federal regulations, state licensing, tax regs.
“It’s crippling. The can-do nation became the nation of red tape,” Dimon said.
As for climate change, Dimon said the country could spend a lot of money and not reduce carbon emissions, or spend almost nothing and reduce it a lot. “So, it’s the quality of the policy. Do we have the guts to have a carbon tax? Use your taxes—things which will drive a lot of decisions very easily every time you make a decision about buying a new refrigerator, put new windows in or paying for solar panels,” he said.
Dimon said he has been back in the JPMorgan office in Manhattan since June, and he’s glad to be meeting with people in person instead slogging through Zoom calls.
“One hundred million people go to work every day, 65,000 people go to our branches every day. Firemen, police, sanitation, hospitals, retail pharmacies, banks, groceries, it’s 40 million who go to work” instead of taking advantage of a remote arrangement, he said. Dimon expects that the “new normal” for many white-collar workers will merge working from home with part time in person where peers can exchange idea. Dimon believe that staying cloistered at home doesn’t work for anyone who wants to hustle and it doesn’t spark spontaneous idea generation.
By September or October, the CEO believes the workplace will “look just like it did before.”