JPMorgan’s Jamie Dimon was out with his annual shareholder letter this week, and one of the many takeaways from the letter is that the CEO is bullish on the U.S. economy – at least for the next couple years.
As vaccinations roll-out and the pandemic feels like its winding down across the nation, Dimon believes the U.S. will see an economic rebound that will stretch into 2023.
“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” Dimon wrote in the letter. “This boom could easily run into 2023.”
Dimon pointed to the unprecedented government spending amid the pandemic that blunted unemployment and averted further economic deterioration, with banks having entered the crisis in a strong position that enabled them to help communities weather the storm.
He also said that the longer-term impact of the reopening boom likely won’t be known for years as it will take time to understand exactly what such massive government funding has done to support the economy, including President Joe Biden’s $2.25 trillion infrastructure proposal.
“Spent wisely, it will create more economic opportunity for everyone,” Dimon added.
Beyond infrastructure, Dimon also noted the strength of U.S. consumers who have used stimulus checks to reduce debt to the lowest level in 40 years and stashed them in savings, giving them an “extraordinary” amount of spending power once lockdowns end and the economy fully reopens again.
With all of this combined, Dimon believes it will add up to a Goldilocks moment where growth will be fast and sustained while inflation will tick up gently. Still, such an outcome could be threatened by coronavirus variants sparking a fourth wave and a sustained jump in inflation that could prompt rates to rise sooner.
While Dimon is bullish on the economy in the near term, he did say there are serious challenges facing the U.S. Dimon said that the country has been tested before in conflicts beginning with the Civil War, the Great Depression, and the societal upheaval of the 1960s and 1970s. And “In each case, America’s might and resiliency strengthened our position in the would, particularly in relation to our major international competitors. This time may be different,” Dimon said.
Dimon warned that the U.S. is a “nation torn and crippled by politics, as well as racial and income inequality – and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals.”
“The good news is that this is fixable,” Dimon added, noting that the nation needs to “move beyond our differences and self-interest and act for the greater good.”