Four days ago, JPMorgan Chase CEO Jamie Dimon was interviewed by The Economist and he discussed the recent U.S. banking disaster that occurred last March. At that time, the public witnessed the second, third, and fourth largest bank failures in U.S. history. Dimon asserted that “for the most part,” the financial crisis of 2023 is over. He downplayed its severity, dubbing it a “mini-crisis” and stating it was “nothing like 2008 or 2009.”
Dimon: ‘I Think the Odds of Rates Going Higher From Here Are Higher Than What Other People Think’
Jamie Dimon, the lead executive at JPMorgan Chase, shared his insights on a myriad of topics including the March 2023 U.S. banking turmoil, soaring interest rates, fluctuating consumer savings, and the escalating conflict in Ukraine. The Economist probed Dimon about his perspective on whether the 2023 banking crisis was truly behind us, to which he replied, it was “for the most part.”
Dimon categorically labeled the banking calamity as a “mini-crisis,” insisting that it paled in comparison to the catastrophic events of “2008 or 2009” when the system was buckling under the pressure of excessive leverage. “There wasn’t too much leverage this time, there’s plenty of capital, we had a trillion dollars in mortgage problems last time.” With regard to the recent incident, the JPMorgan chief highlighted that certain banks suffered from interest rate exposure and witnessed “uninsured deposits that kind of ran like a flock of birds.”
Dimon proposed his belief that rates have the potential to “go up from here and they might rear it’s ugly head again.” He expressed hope that banks, along with other financial institutions, are braced for this potential upheaval. “I think the odds of rates going higher from here are higher than what other people think,” he emphasized, speaking about the federal funds rate. “We’ve never had quantitative tightening before, I think the effects on that in the market may be more serious than other people think.”
Furthermore, Dimon conveyed that JPMorgan foresees American consumers exhausting their pandemic savings by the close of the year. “Consumers have money, they have a trillion dollars more in their checking accounts, and it’s been coming down and we think sometime around the end of the year … that excess money will be spent,” he predicted. Despite this not being the most welcome news, Dimon is not overly apprehensive about a recession.
“It’s possible you know, [a recession] and it could be very mild, it could be a soft landing, and it could be a hard landing,” Dimon mused. “I’m much more worried about some of these other serious things getting worse, the war in Ukraine spreading out, nuclear blackmail, you know if food doesn’t get delivered there’s starvation in Africa … I’m far more worried about that.” While Dimon acknowledged the potential for these concerns to subside, he cautioned against outright expecting this to happen.
What do you think about Jamie Dimon’s interview and his statements about the U.S. economy? Share your thoughts and opinions about this subject in the comments section below.