JPMorgan Chase & Co. President Jamie Dimon on Friday warned of an “uncertain” year ahead, citing challenges such as inflation and geopolitical tensions threatening the U.S. economy.
The warning came after JPMorgan, the nation’s largest bank by assets, reported a modest 6% profit increase in the first quarter. Shares fell 6.5% to $182.79 following a big selloff on Wall Street.
“Many economic indicators remain strong. But as we look to the future, we remain wary of a number of significant uncertain forces,” Dimon said, adding that wars in Gaza and Ukraine and other It cited geopolitical pressures, high government spending and “sustained inflationary pressures” as “part of the recession.” The world situation is causing anxiety.
Dimon famously predicted that a “hurricane” could hit the economy in 2022, a prediction that didn’t come true, but it wasn’t all doom and gloom.
“The U.S. economy is doing well,” he said in a conference call. “Consumers still have extra cash. Stock prices are going up.”
JPMorgan made a profit of $13.42 billion, or $4.44 per share, in the three months ended March 31, compared with the same period in 2023, when the Wall Street giant posted a record of nearly $50. of $12.62 billion, or $4.10 per share. Billion profit.
Other large banks reporting results on Friday did not perform similarly.
Profits fell 27% from a year earlier as Citigroup continues to restructure and slim down the bank itself after selling off many of its overseas franchises in the wake of the pandemic. Citi stock fell 1.7%.
Wells Fargo’s first-quarter profits fell 7% as the company paid more to hold customer deposits amid lower demand from borrowers. The bank’s stock fell less than 1%.
Mr. Dimon reiterated the economic caution he shared in his annual shareholder letter earlier this week.
In his memo, Mr. Dimon wrote that U.S. interest rates would rise to 8.8% in the coming years thanks to “the trillions of dollars needed each year to build a green economy, remilitarize the world, and reshape global trade.” He said it could rise by more than 30%.
Mr. Dimon told investors that bets that the Fed would pull off a “soft landing” that would curb inflation without causing a recession were overblown.
“These markets appear to be pricing in a 70% to 80% chance of a soft landing,” Dimon wrote in a note. “I think the odds are much lower than that.”
“The worst-case economic scenario would be stagflation,” he added, with the economy stagnant and “not just higher interest rates, but higher credit losses, lower trading volumes and more difficult markets.” Dew,” he added.
Mr. Dimon’s memo was released just before the latest inflation numbers showed U.S. inflation soared to 3.5% in March.
This number, along with March’s surprisingly resilient jobs report that showed employers posted a whopping 303,000 payroll increases last month, is another data point that throws cold water on the Fed’s rate cut schedule. It became.
Mr. Dimon has long warned about the future of the economy. Regarding America’s financial situation in 2022, he said: I don’t know if it’s something minor or something like Sandy or Andrew from Superstorm. You better brace yourself. ”
Since then, the Israel-Gaza war has broken out and policymakers have failed to bring inflation closer to the 2% target, resulting in interest rates rising to 5.5% from the current 23-year high of 5.25%. It was done. .
However, the US economy is doing well.
More recently, in January, Mr. Dimon likened the economic situation to a cliff, saying it would be another 10 years before the nation descends into financial crisis.
“This is a cliff, you see a cliff. About 10 years later, going 60 miles an hour. [toward it]” the 68-year-old JPMorgan chief executive told Fox, while also sounding the alarm on America’s debt.
Currently, the debt-to-GDP ratio is over 100%, 123% to be exact according to the International Monetary Fund, and is projected to reach 130% by 2035.
The consensus among traders is that the Fed will hold off on cutting interest rates from current 23-year highs until September, rather than July. Economists also widely expect that there will be only two quarter-point cuts, rather than three.
with post wire
