Don’t Worry: The Economy Will Boom Up Ahead, Says Dimon

Jamie Dimon

Turn that frown upside down. That’s the message from JPMorgan Chase CEO Jamie Dimon, who believes the nation is entering the best economic growth phase it has seen since the 1940s.

Despite all kinds of economic malaise, he is pushing an optimistic forecast where even rising interest rates will be no problem. “We’re going to have the best growth we’ve ever had, this year, I think since maybe sometime after the Great Depression,” Dimon said on CNBC, speaking from a health care conference the bank sponsored. “Next year will be pretty good, too.”

In December, consumer confidence dove, down 12.5% from the year before, according to the University of Michigan sentiment index. Rising inflation—the new Consumer Price Index (CPI), released Wednesday, hit 7%, the highest level since 1982—has disheartened many. So has the rampant spread of the Omicron variant, with new cases running well over an average 500,000 daily in the US, the largest tally thus far in the pandemic.

But to Dimon, the solid condition of US households’ finances will prevail and restore people’s sense of comfort, with the economy rising as a result. “The consumer balance sheet has never been in better shape: They’re spending 25% more today than pre-COVID,” he said. “Their debt-service ratio is better than it’s been since we’ve been keeping records for 50 years.”

That said, the stock market might not tag along with this core economic strength, Dimon warned. More ups and downs lie ahead, he cautioned. “The market is different,” he said. “We’re kind of expecting that the market will have a lot of volatility this year as rates go up and people kind of redo projections.”

Dimon also expressed optimism that the Federal Reserve actions will pull back today’s robust inflation, without damaging economic growth. “If we’re lucky, the Fed can slow things down and we’ll have what they call a ‘soft landing,’” he said. The Fed’s policymaking body’s members last month predicted three quarter-point increases in the benchmark fed funds rate. But Goldman Sachs and Deutsche Bank economists have forecasted that it will be four.

“It’s possible that inflation is worse than they think, and they raise rates more than people think,” Dimon said. “I personally would be surprised if it’s just four increases.”