Jamie Dimon, CEO of JPMorgan, sees ‘Goldilocks moment’ for US economy

The head of America’s largest bank said the US economy was emerging from the coronavirus pandemic in a boom that could last until 2023.

In its annual letter to shareholders on Wednesday,

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Chase & Co. CEO Jamie Dimon said big savings for consumers, expanded vaccine distribution and the Biden administration’s proposal $ 2.3 trillion infrastructure plan could lead to an economic “Goldilocks moment” – rapid, sustained growth alongside inflation and slowly drifting upward interest rates.

Mr. Dimon’s outlook is decidedly rosier than a year ago, when he warned shareholders to prepare for a “bad recession” in which U.S. gross domestic product could drop to 35%. He wrote last year’s letter a few weeks after being rushed into emergency surgery to repair a potentially fatal heart injury, and the United States has fallen into darkness to prevent the coronavirus from spreading.

The U.S. government’s rapid and deep monetary and fiscal intervention over the past year has helped prevent many of the worst outcomes, said Dimon, who has since fully recovered from the aortic tear he has had. suffered in March 2020.

“That’s a lot of money, and it can only cause a booming economy,” he said in an interview with The Wall Street Journal. “Shame on us if we don’t use this growth to help those who need it most.”

In his letter, Dimon called for laying the groundwork for long-term economic growth with a one-year national ‘Marshall Plan’ – referring to the US initiative to help Europe West to rebuild after World War II.

Affordable child care, streamlined safety net programs and skills training leading to better paying jobs would increase labor market participation, he said. But such a plan, Mr Dimon said, “could very well mean higher taxes for the rich.”

“[Taxes] will have to go up; you can’t manage a 10% to 15% deficit forever, ”he said in the interview. “If people thought their taxes were going to help the poor and disadvantaged, they would much rather pay more.”

Any corporate tax rate changes, he said, should be “reasonable and moderate” to keep the United States competitive with other countries.

Banks, which tend to profit from periods of growth, would welcome a boom. They have held up better than expected after the coronavirus devastated the economy last year, in large part thanks to the unprecedented government stimulus given to consumers and businesses. Much of this aid has flowed through large banks such as JPMorgan.

The bank of assets of $ 3.4 trillion posted record quarterly profit in the final three months of 2020, a solid end to a year that started with a 69% drop in profits. Analysts expect a profit of around $ 9.26 billion when JPMorgan releases first quarter results next week.

In the coming months, JPMorgan and other major banks are expected to release tens of billions of dollars in reserves they set aside to cover degraded loans that still have not materialized, a year after the start of the pandemic.

Still, a number of obstacles could derail the boom, Dimon said. Faster-than-expected inflation could lead the Federal Reserve to raise short-term interest rates, weighing on business investment and overall growth. The recovery may also fail to reach its potential if government investments in infrastructure are not accompanied by specific mechanisms to measure effectiveness, he said.

In his 65-page letter, Dimon also explained how the bank’s roughly 250,000 employees will work after the pandemic. Many will be in the office full-time, with less time shared between home and office or working remotely, Dimon said.

A coronavirus epidemic in the trading room From the bank’s headquarters to Madison Avenue in March and April this past shocked some core workers who were expected to continue entering the office.

The bank is moving forward with plans to build a new headquarters in New York City that will house between 12,000 and 14,000 employees, he said.

The IRS sent about 90 million stimulus checks to Americans in March. WSJ chief economic commentator Greg Ip explains why stimulus checks alone are unlikely to boost inflation. Photo illustration: Carlos Waters

Write to Orla McCaffrey at [email protected]

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