Why JPMorgan CEO Jamie Dimon Is Skeptical of an Economic Soft Landing | WSJ

Summary

In a comprehensive interview, Jamie Dimon, CEO of JPMorgan Chase, discusses a range of topics from the current state of the U.S. economy to geopolitical tensions. He expresses concern over the challenges facing the free Western world due to conflicts and alliances between countries like Russia, Iran, North Korea, and China. Dimon provides insights into consumer spending, the potential for inflation, and the impact of fiscal policies. He also addresses the Biden administration's economic policies, the role of the Federal Reserve, and the importance of national security in trade. Furthermore, he shares his views on the ongoing conflicts in the Middle East and Ukraine, the U.S.'s stance on these issues, and the complex relationship with China. Dimon emphasizes the need for careful consideration of economic and geopolitical strategies, while also discussing his personal experiences with health scares and their influence on his outlook on life and leadership.

Takeaways

• 🌎 The biggest threat to the global economy, as seen by Jamie Dimon, is the geopolitical tensions involving Russia, Iran, North Korea, and China, and their impact on the free Western world.
• 💰 Despite a seemingly strong economy with low unemployment and rising housing and stock prices, Dimon cautions that growth is heavily driven by fiscal spending, which could lead to persistent inflation.
• 📈 Dimon expresses concern that the current economic situation might not result in a soft landing as expected, and that interest rates may need to rise more than anticipated.
• 🤔 There is a disconnect between the overall economic health and how individuals, particularly the lower 20% of income earners, are feeling, with many struggling due to stagnant incomes and societal issues.
• 🕊️ On a softer landing, Dimon admits to being more cautious than optimistic, comparing the current situation to the 1970s and warning against a false sense of security.
• 💵 Bidenomics is seen as partially effective in stimulating growth, but Dimon questions whether all segments of society are benefiting, especially in rural areas and inner cities.
• 🏛️ Dimon respects Jerome Powell's role as Fed Chairman, despite believing the Fed was late in raising rates, and agrees with the current观望 (wait-and-see) approach.
• ⚖️ The US's stance on the Israel-Hamas conflict is supported by Dimon, who believes Israel has the right to defend itself, while also acknowledging the tragic nature of war.
• 🔥 A Russian victory in the Ukraine war could lead to a global economic disaster and shake alliances, raising questions about the reliability of American support for Europe.
• 🇨🇳 Regarding China, Dimon suggests a measured approach, focusing on restructuring trade around national security interests and being prepared for potential sanctions and counter-sanctions.
• 🏦 Dimon dismisses the idea of him becoming the Fed Chairman or Treasury Secretary, emphasizing his commitment to his role as CEO and the importance of surrounding any president with a diverse set of experts.

Q & A

What is Jamie Dimon's primary concern regarding the global situation?

Jamie Dimon's primary concern is the challenges facing the free democratic Western world, including the Ukraine war, terrorist activities in Israel, and the geopolitical tensions involving Russia, Iran, North Korea, and China.

How does Dimon assess the current financial health of the US consumer?

Dimon views the US consumer as being in pretty good shape, with low unemployment, rising housing and stock prices, plentiful jobs, and increasing wages, although he cautions that much of this is driven by fiscal spending which could lead to persistent inflation.

What is Dimon's outlook on the potential economic outcomes for the US in the coming years?

While there could be a soft landing for the economy, Dimon expresses more concern that the landing may not be as soft as expected, with inflation possibly lasting into 2025 and 2026, and interest rates potentially needing to rise higher.

Why does Dimon believe there is a disconnect between the rosy economic picture and how consumers feel?

Dimon acknowledges that while the overall consumer is doing well, the bottom 20% of Americans have not fared as well over the last 20 years, with barely increased incomes and struggles to access mortgages and housing, leading to societal disparities.

How does Dimon evaluate the current stance of the Federal Reserve under Jerome Powell's leadership?

Dimon respects Powell and believes the Fed was late in raising rates but has since caught up. He also thinks the Fed is right to be cautious and watchful at the moment, given the uncertainty surrounding the full effects of quantitative easing.

What are Dimon's views on the US's position towards the Israel-Hamas conflict?

Dimon believes Israel has the right to defend itself and that war is terrible with high civilian casualties. He condemns the actions of Hamas and leaves military strategy to the experts.

What potential global economic impact does Dimon foresee if Russia were to win the war in Ukraine?

Dimon sees it as a potential disaster, leading to a realignment of global alliances and economic relationships, and possibly pushing the world into a state of chaos.

How should the US approach its relationship with China, according to Dimon?

Dimon suggests the US should take a deep breath, restructure trade around national security, and negotiate with China on strategic resources like LNG. He also believes that if China is aiding the Russian war effort, it could complicate relations.

Who does Dimon believe should be surrounded by the next US President?

Dimon suggests that the next President should be surrounded by a diverse group of experts, including not just academics but also practitioners with real-world experience.

How has Dimon's personal life been influenced by his health scares?

Dimon mentions that he likely has some PTSD from his health issues and that he tries to live life more deliberately. His desire to help the country and the world has been reinforced by these experiences.

What does Dimon believe is the ideal number of days for people to be in the office?

Dimon believes that five days in the office is ideal.

What is Dimon's opinion on the future of America's downtowns?

Dimon does not believe America's downtowns are dead, although he acknowledges that some may struggle due to local policies.

What advice does Dimon have for young people who want to work at JPMorgan?

Dimon suggests that while any field of study is valuable, learning accounting and basic business principles can be particularly helpful. He emphasizes the importance of being smart, ethical, and decent.

What does Dimon's morning routine consist of?

Dimon wakes up around 4:30 or 5, reads five newspapers, and then exercises before going to the office.

Does Dimon ever switch off his phone?

Dimon is not fanatical about his phone and does not feel the need to be constantly connected. He is not on social media and believes people should spend less time on their phones.

Outlines

00:00

🌟 Economic Outlook and Geopolitical Concerns

Jamie Dimon discusses his perspective on the current state of the American economy and the threats to the Western world, including the Ukraine war and tensions with Russia, Iran, North Korea, and China. He expresses concern over fiscal spending driving growth and the potential for persistent inflation. Dimon also touches on the disconnect between economic data and consumer sentiment, emphasizing the struggles of lower-income Americans.

05:01

🏛️ Geopolitical Tensions and Their Economic Impact

The conversation shifts to the geopolitical backdrop, focusing on the Middle East conflict and the war in Ukraine. Dimon stresses the importance of Israel's right to self-defense and the potential global economic disaster if Russia were to win in Ukraine. He also addresses the complex relationship with China, suggesting a cautious approach to trade and national security, and the potential for economic realignment should Russia succeed in its invasion.

10:02

💼 Leadership, Balance, and Personal Experiences

Dimon reflects on his role as a leader, the importance of having a strong team and support system, and the influence of personal experiences such as health scares on his outlook. He also discusses the importance of work-life balance, his morning routine, and the value of taking time away from digital distractions. Additionally, he shares his thoughts on the current state of American downtowns, the ideal workweek, and advice for young people interested in a career at JPMorgan.

Keywords

💡Geopolitical backdrop

The geopolitical backdrop refers to the political, economic, and social factors that influence international relations and have an impact on global events. In the video, Jamie Dimon discusses the impact of the Ukraine war, terrorist activities in Israel, and tensions between Russia, Iran, North Korea, and China on the stability of the free Western world and the global economy.

💡US consumer financial health

US consumer financial health pertains to the economic well-being of individual American consumers, including their income, employment status, and ability to access credit. The script mentions that despite a seemingly robust economy with low unemployment and rising housing and stock prices, there are concerns about the sustainability of growth driven by fiscal spending and the potential for persistent inflation.

💡Fiscal deficit

A fiscal deficit occurs when a government's expenditures exceed its revenues. In the context of the video, Jamie Dimon expresses caution about the US's fiscal deficit, which stands at 6% of GDP, indicating that this level of spending could lead to future economic challenges, such as inflation.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The video discusses concerns that inflation may not be as transient as expected, potentially leading to higher interest rates and affecting the economy in the long term.

💡Soft landing

A soft landing in economics refers to a period of slower economic growth that avoids a recession. Dimon mentions the possibility of a soft landing for the economy but expresses a more cautious view, suggesting that inflation may not subside as anticipated.

💡Income inequality

Income inequality is the uneven distribution of income within a population. The transcript highlights that the bottom 20% of Americans have not fared well over the past 20 years, with barely any increase in incomes, indicating a significant income inequality issue.

💡Bidenomics

Bidenomics refers to the economic policies of the Biden administration. In the video, Jamie Dimon gives a partial endorsement of Bidenomics, acknowledging growth due to government spending but also noting that some segments of society, particularly in rural America and inner cities, may not feel the benefits of this economic policy.

💡Federal Reserve

The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. It plays a critical role in setting monetary policy, including interest rates. The video includes a discussion about the performance of Jerome Powell, the current chairman of the Fed, and the challenges of managing the economy amidst fiscal deficits and quantitative easing.

💡Nuclear blackmail

Nuclear blackmail is the use of nuclear weapons as a threat to deter others from taking action against one's interests. In the context of the video, Dimon discusses the implications of Russia's invasion of Ukraine and the potential use of nuclear blackmail, which could have significant global repercussions.

💡Supply chains

Supply chains describe the network of organizations, people, activities, information, and resources involved in manufacturing and delivering a product or service. The transcript touches on the intertwined nature of global supply chains, particularly with China, and the strategic importance of restructuring trade around national security interests.

💡Chief executive

A chief executive, often referred to as a CEO, is the highest-ranking executive in a company and is responsible for making major corporate decisions, managing operations, and acting as the main point of communication between the board of directors and corporate operations. The video script includes insights into the pressures and responsibilities of being a CEO, as well as the importance of checks and balances within a leadership role.

Highlights

Jamie Dimon emphasizes the importance of the free Western world and its stability as a key concern for America's economy and global politics.

Dimon identifies the Ukraine war and geopolitical tensions involving Russia, Iran, North Korea, and China as significant threats to the global order.

Despite a strong consumer economy, Dimon warns of potential inflation and fiscal spending consequences down the road.

The CEO of JPMorgan expresses cautious optimism about the economy, suggesting that inflation may persist beyond expectations.

Dimon acknowledges a disconnect between economic indicators and how the average consumer feels about their financial situation.

He discusses the struggles of the bottom 20% of Americans who haven't seen significant income growth in the past 20 years.

Dimon admits to being more cautious than the market about a soft economic landing and the potential for higher interest rates.

On Bidenomics, Dimon says it has worked partially, with growth from spending and positive aspects like infrastructure investment.

Dimon respects Jerome Powell but thinks the Federal Reserve was late in raising rates and is cautious about the future impact of quantitative easing.

He supports Israel's right to defend itself amidst the conflict with Hamas, while condemning civilian casualties and unjustifiable actions.

Dimon outlines the potential global economic disaster if Russia were to win the war in Ukraine, including the impact on alliances and the perception of nuclear deterrence.

Regarding China, Dimon advises the U.S. to take a measured approach, focusing on restructuring trade around national security interests.

Dimon declines the idea of becoming a Federal Reserve Chairman or Treasury Secretary, focusing on his role as a CEO.

Reflecting on personal health scares, Dimon shares how the experiences have made him live life more deliberately with a desire to help the country and the world.

Dimon believes that checks and balances come from his management team, regulators, auditors, and the press, fostering an open dialogue within the company.

He encourages CEOs to comment on polarizing issues publicly if it's appropriate and they know how to navigate the conversation.

Dimon's advice for young people wanting to work at JPMorgan is to study broadly, with an emphasis on accounting and basic business principles.

On his personal time, Dimon enjoys family activities, wine, music, and has recently started playing squash again.

Dimon's morning routine includes waking up early, reading five newspapers, and exercising before heading to the office.

He does not use social media and suggests people spend less time on their phones and more time in thoughtful reflection.

Transcripts

- Jamie Dimon, thank you very much

for sitting down with us today.

I spent a lot of time this weekend reading your letter

and my biggest takeaway from it

was that you have a very clear sense

of what's good for America,

what's good for the economy, and what's good for JPMorgan.

What is the biggest threat in your mind

to that confident vision?

- So every year, when I write that letter, I try to think

of what are the most important things,

and I would add to that the free Western world

'cause that's what worries me the most is that, you know,

the Ukraine war, the terrorist activities in Israel,

you know, the thread that that's drawing between Russia,

Iran, North Korea, China, the difficulties of our age

with China, that whole thing is challenging,

We would call the free democratic Western world.

And that to me is the most important thing

that we get all of that right.

- I wanna come back to the geopolitical backdrop

in a minute, but right now, I want

to focus specifically on the economy.

As the chief exec of America's biggest bank,

you have an unrivaled insight into the financial health

of the US consumer.

What are people doing with their money right now?

- You have to look at it in a little bit of context.

The consumer's in pretty good shape right now.

Unemployment's under 4%, has been there for two years.

Housing prices are up, stock prices are up,

jobs are plentiful, wages are fine, going up at the low end.

The consumer's in pretty good shape.

The one thing you gotta be cautious about,

a lot of it's driven by just fiscal spending.

So even today, the deficit of 6% of GDP, you know,

almost $2 trillion, that's driving a lot of this growth.

And that will have other consequences possibly

down the road, you know, called inflation,

which may not go away like people expect.

So when I look at the range of possible outcomes, you know,

you can have that soft landing.

I'm a little more worried

that it may not be so soft

and inflation may not go quite go away people expect.

I'm not talking about just this year,

I'm talking about '25 and '26.

The rates may have to go up a little higher.

I'm talking about the 10-year rate, the five-year rate,

and you know, that can have consequences.

So we'll see.

- But right now, you describe a pretty rosy picture

and yet we know consumers aren't feeling it.

Why this disconnect?

- Yeah, well, you have to look at different consumers here.

So the bottom 20% of America

have not done particularly well over the last 20 years.

Incomes barely went up.

Remember, suicide, fentanyl, crime, inflation,

there are a lot of negative effects.

Some people can't get mortgages, can't buy their home.

So yeah, there's a part of society who's kind of struggling,

there's a part of society who's not.

And I think that's a different issue

about how we deal with the policy.

But you can see why that has people upset.

- So just to go back to the soft landing.

In the letter, you concede you were on the hawkish side,

but then things played out in a more benign fashion.

But still is a slightly begrudging concession.

You yourself sound quite glum in the letter.

Can you tell us a bit more about why that is?

- So I'm not looking at a year,

I'm not making a forecast.

I'm trying to say what are the range of possible outcomes?

And last year and this year,

I would put out the same issues.

Huge amount of fiscal deficit, huge amount of QE,

a lot things in the future inflationary, the green economy,

the remilitarization of the world.

Obviously, the deficits,

which basically aren't gonna go away

as far as the eye can see, and geopolitics.

All that puts me on the side of caution

that things may not go as well as people expect,

but the odds of a soft landing, the market kind

of prices in 70%, I think it's half of that.

As a business person, I try to be prepared for all of that.

Just a little cautious.

It looks a little bit more like the '70s to me.

And I point out to a lot of people,

things looked pretty rosy in 1972.

They were not rosy in 1973.

So don't get lulled into a false sense of security

because the today looks okay, that tomorrow's gonna be okay.

So just trying to separate the two.

- Sticking with today then, is Bidenomics working?

- Partially.

You know, when you spend that kind of money,

you're gonna have growth and we needed some of it,

like some of the industrial policy.

I think the infrastructure thing is terrific.

That was bipartisan.

Other things will remain to be seen.

And I think some of the American public looks at it,

like what are they getting?

So if you go to rural America or inner cities,

I'm not sure they feel like they're being lifted up

by this economy.

- Do you think Jerome Powell is doing a good job

as chairman of the Fed?

- I have tremendous respect for Jay.

I think the Fed was probably late in raising rates.

They caught up.

They're probably right in watching right now.

We don't know what's gonna happen. You might as well wait.

We also don't know the full effect of QE.

Again, I'm a little more on the cautious side of that.

Most people have a general feeling

that you can reduce the balance sheet

by several trillion dollars

and its effect will not be felt.

I'm not so sure. We've never had it before.

- Switching tack now to geopolitics.

We've got wars going on in the Middle East

and in Europe that create an enormous amount

of economic uncertainty.

If we focus first on the Middle East,

do you think that the US position

towards the Israel-Hamas war is the right one?

- I think Israel has the right to defend itself.

I think war is a terrible thing.

I think people have to be honest about what war is,

you know, and when they look at these civilian deaths

and all the things like that.

So I don't know the specifics of the military.

I think the notion

that they aren't gonna defend themselves is wrong.

So I'll leave the military experts decide, you know,

what's the right way to go do that.

Every general I've seen on TV,

and I've spoken to several, you know,

city conflict is really bad

and you know, it's door by door, higher amount

of civilian casualties.

Hamas must have known there was gonna be quite a reaction

to what they did.

By the way, it's unjustifiable for any reason ever.

So I wanna be clear about that.

- And then we've got a war in Ukraine as well

where Ukraine clearly struggling against Russia.

What would it mean for the global economy

if Russia was to win?

- It could be a potential disaster

because this is the first war in Europe.

Free democratic nation invaded by two

or 300,000 Russian soldiers under the threat

of nuclear blackmail.

So, you know, we've never had nuclear blackmail before,

which is also teaching the whole world,

you know, maybe having nuclear weapons pretty good thing

because people will be afraid of you

and you can, you know, abuse a neighbor if you feel like it.

But the other thing is affecting all alliances.

If Russia wins, I personally think you might see a lot

of people deciding that, you know,

will America stand up for Europe?

Can you rely on them?

And if you can't rely on them, what are you gonna do?

And that includes economically.

So that's why I kind of talk about the economic battlefield

and the battlefield.

So economically, every nation can say what makes me secure?

What makes me secure in energy, food,

and all the things I need?

So I'm a little worried that if Russia wins that war,

you're gonna see kind of the world kind

of enter a little bit of chaos as people realign alliances

and economic relationships, et cetera.

- So China's complicated obviously,

because on the one hand, we have so much trade with China,

the supply chains are integrated.

But at the same time, we reported recently

that China is aiding the Russian war effort

and there's now a proposal by the US

to sanction Chinese banks.

How should the US approach China?

- You know, I would tell America, take a deep breath.

We have all the food, war and energy we need.

The Atlantic and the Pacific,

no wars in North America, South America.

China imports 11 million barrels of oil a day.

They're a very complicated neighbor.

Their own actions are causing all their neighbors to re-arm.

Their GDP per person is $15,000 versus our 80.

So we're in a very good position.

We have to restructure trade around national security.

They need oil and gas.

So the LNG I think is very important strategically.

So I would negotiate them around all of that

and I'm glad they're doing it.

As long as Ukraine is there

and they're doing anything to aid and abet,

I think it makes it very hard

to have a great relationship with them.

I'm glad the government has the authority

to do certain things.

If, in fact, some of these things are true,

yeah, they should do some sanctions,

but they should expect some back, by the way.

- I want to turn out to domestic matters

and the forthcoming election.

We're in the very unusual position of knowing

what a Trump presidency looks like.

We know what a Biden presidency looks like.

Who's the best candidate for the economy for 2024?

- Okay, I'm not gonna go into that kind of thing right now.

And whoever is president, you know, we will try to help.

I would like them to put a lot of experts around them.

Not just academic,

but practitioners in the real world

because I think it matters.

- How about you as one of the experts?

I know your name has come up in the context

of a new Fed chairman.

- I would not do Fed chairman, Treasury Secretary.

I don't think I'd ever be picked for that.

- Okay, you're not a politician,

but you are a chief executive

and obviously, there are a lot of pressures with the job.

You had a near death-experience about four years ago

with your aortic tear

and before that, you'd had a big cancer scare.

How did those experiences change you?

- The cancer scare was cancer.

- Yeah.

- I don't know.

I probably have a little PTSD from all of them.

And I think you try to live life a little more deliberately.

So I love what I do, I love my job, I love my family,

I love all those things.

So nothing really changed that way,

but it was a little more deliberate.

When I was being wheeled in the operating room

for the dissection,

I knew it was like 50-50 and I didn't have any regrets

because people always said, "Do you have regrets?"

I say no, and the only thing I would say,

I do wanna help this country and the world

and the free Western world.

That is on my mind and maybe that changed a little bit.

- Yeah.

Now, you've been chief exec for 18 years

and you're obviously in a very powerful position.

But even the most powerful people,

powerful leaders need checks and balances.

Who keeps you in check?

- Well, my wife would probably say, "I do" and she does.

But look, I think my management team,

we're all very open, we share everything.

I emote to them in ways

that you wouldn't hear me do it elsewhere.

They emote back, you know, "You're wrong.

You didn't read it properly or you missed this major point."

So it's a very open conversation.

I don't think any of those folks are intimidated by me.

And there's very little

after the fact conversation, like, okay,

"I didn't wanna mention this in front of everybody."

They're brave enough to mention in front of anybody.

And I've had people, three of 'em come in and say,

"Jamie, you're making a mistake.

Sit down, we wanna explain it to you. Don't say anything."

I say, "Okay, lay it on me."

So you try to create a very open environment.

And we have regulators, auditors, press.

So believe me, we get a lot of feedback

from a lot of people.

- Just to bring it back to the current news cycle

with these very polarizing issues in America.

Do you think that's the sort of thing

that chief execs like you should comment on publicly

or make statements as a company on?

- The answer is yes if it's appropriate

and you know how to do it.

So, you know, in my letter it's quite clear,

I'm like a full-throated, red-blooded, patriotic,

free enterprise capitalist.

And I'm unabashed and unashamed.

I also acknowledge that we've left part of society behind.

There's nothing wrong with acknowledging it

and trying to do something about it.

So, you know, we do a little bit of both.

So we'll support the LGBT community.

We'll support free, fair, safe voting, when it comes

to lifting up other parts of society, absolutely.

- So I've got some final questions here.

They're short questions that require short answers.

- Okay.

- How many days should people be in the office?

- Five is ideal.

- Are America's downtowns dead?

- No, I think some are gonna have difficulty

with their own policies, but no.

- If you're a young person

and you want to work at JPMorgan,

what should you study at college?

- It almost doesn't matter to tell you the truth

'cause you're looking for smart, ethical, decent people.

I do think in business you should learn the language

of your business, which is accounting

and learn a little basic business.

So I think it would help to do accounting,

finance, markets, something like that.

- On the rare occasion that you take a day off,

what do you do?

- So my daughters have said,

"Dad, you need some more hobbies."

I love my family.

So we have a lot of family dinners when I'm around.

We hike together, we take vacations together.

I love wine, I love music.

And I just started playing squash again,

which I'm still worried about, but I'm gonna do it.

- What's your morning routine?

- Okay, I wake up usually at 4:30 or 5.

I read five papers, you'll be happy to hear,

in a very specific form.

So I flick through The Post, I read the front page

of The Washington Post,

then I read The New York Times' front section,

beginning to end, all of it.

I read their business section, which isn't great.

Then I read The Wall Street Journal front section,

Exchange next and then the FT.

And the reason I do FT last

is because all the other ones are very much skewed

to the US.

So I like reading, I'll do it for hours in the morning,

but then I like to get a little exercise

and go into the office.

- And do you ever switch off your phone?

- I am not a fanatic on the phone.

I don't even have it here, I have it outside,

but I think people should spend a little less time in that,

a little more time thinking.

But I'm not on any social media.

Every year I test it.

I go on for literally just a week to see

what everyone else is doing.

You know, Reels and Instagram and Facebook and TikTok

and then I click out of it.

- Never tempted.

- No.

- Good, well, Jamie Dimon, thank you very much indeed.

- Emma, it was a pleasure.

Thank you.