By Zachary Halaschak, Economics Reporter. Media: Washingtonexaminer
JPMorgan Chase CEO Jamie Dimon poured cold water on the notion of a continuing economic boom, calling belief in the scenario a “huge mistake.”
Dimon, speaking on Monday at the Barclays Global Financial Services Conference, tore into those who are predicting smooth sailing in the years to come for not factoring in several big risks that the economy faces. He highlighted problems with government spending, uncertainty in Ukraine, and monetary tightening by worldwide central banks.
“To say the consumer is strong today, meaning you are going to have a booming environment for years, is a huge mistake,” he said, according to CNBC.
The Federal Reserve and other central banks across the globalized economy have been tightening monetary policy in response to the towering inflation that has cut into the budgets of households across the developed world and made life much more unaffordable.
To curb inflation, the Fed has tried to squelch demand by raising interest rates, but doing so by too much could cause recessionary conditions and lost jobs, a scenario Dimon seemed to think many economists and business leaders might be downplaying.
Just six months ago, many economists predicted that the U.S. economy would be in a recession by now, and because the labor market has held up better than expected, some are breathing a sigh of relief. But Dimon cautioned the conference on Monday that because of the lagging effects of monetary policy, businesses should not start celebrating quite yet.
“Businesses feel pretty good because they look at their current results,” Dimon emphasized. “But those things change, and we don’t know what the full effect of all this is going to be 12 or 18 months from now.”
The Fed has been raising rates since March of last year. Most investors think the tightening cycle is done and that the central bank will pause for several months before slashing rates, although Fed Chairman Jerome Powell has left the door open to further rate hikes should officials deem them necessary to tame inflation.
Dimon also cautioned that the tenuous relations between the United States and China could further deteriorate. He stressed that while he isn’t predicting a war in Taiwan, things could “go south.”
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