Jamie Dimon says it’s a ‘huge mistake’ to think economy will boom with so many risks out there

JPMorgan Chase CEO Jamie Dimon said Monday that while the U.S. economy is doing well, it would be a “huge mistake” to believe that it will last for years.

Healthy consumer balance sheets and rising wages are supporting the economy for now, but there are risks ahead, said Dimon, who was speaking at a financial conference in New York. Topping his concerns include central banks reining in liquidity programs via “quantitative tightening,” the Ukraine war, and governments around the world “spending like drunken sailors,” the executive said.

“To say the consumer is strong today, meaning you are going to have a booming environment for years, is a huge mistake,” he said.

The world’s largest economy has defied expectations for a downturn for the past year, including from prognosticators like Dimon, head of the biggest U.S. bank by assets. Last year, he warned that a potential economic hurricane was on the way, citing the same concerns around central banks and the Ukraine conflict. But the U.S. economy has proven resilient, leading more economists to expect that a recession might be avoided.

“Businesses feel pretty good because they look at their current results,” Dimon said. “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.”

While JPMorgan and other banks have been “over-earning” on lending for years because of historically low default rates, strains were emerging in parts of real estate and subprime auto lending, Dimon said.

“If and when you have a recession, which you’re eventually going to have, you’ll have a real normal credit cycle,” Dimon said. “In a normal credit cycle, something always does worse than” expected, he added.

Dimon struck a note of caution throughout the panel discussion. JPMorgan is repurchasing stock at a “lower level” than before, a pace which might last through 2024, he said, as the bank husbands capital to adhere to upcoming rules.

He called the new regulatory mandates “hugely disappointing” and pushed for greater transparency from regulators, saying that JPMorgan would have to hold about 30% more capital than European banks.

“Is that what they want? Is that good, long term?” Dimon asked. “What was the goddamn point of Basel in the first place?”

When asked about whether the IPO and merger markets were picking up given the upcoming Arm listing, Dimon said he encouraged CEOs to take action rather than waiting too long.

“I think the uncertainties out there ahead of us are still very large, and very dangerous,” Dimon said.

Among those risks is the deterioration in relations with China, he said. Prospects for JPMorgan operations in China went from looking bright to only “just OK” because of the rising risks, he said.

“I don’t expect war in Taiwan, but this can go south,” Dimon said.