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JPMorgan Chase CEO Jamie Dimon connected Monday warned that excessive authorities spending successful nan U.S. whitethorn proceed to substance some precocious ostentation and liking rates.
In his annual missive to shareholders, nan main executive of America's largest slope offered his appraisal connected nan authorities of nan U.S. economy, nan likelihood of a soft landing and nan outlook for artifical intelligence.
"It is important to statement that nan system is being fueled by ample amounts of authorities shortage spending and past stimulus," Dimon wrote. "There is besides a increasing request for accrued spending arsenic we proceed transitioning to a greener economy, restructuring world proviso chains, boosting subject expenditure and battling rising wellness attraction costs."
"This whitethorn lead to stickier ostentation and higher rates than markets expect," he added.
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JPMorgan Chase CEO Jamie Dimon attends a proceeding connected oversight of Wall Street firms earlier nan Senate Committee connected Banking, Housing, and Urban Affairs successful Washington, D.C., connected Dec. 6, 2023. (Aaron Schwartz/Xinhua via / Getty Images)
Dimon's comments travel arsenic Federal Reserve policymakers measurement erstwhile to commencement cutting liking rates amid concerns that advancement connected ostentation has stalled. While ostentation has fallen considerably from a highest of 9.1%, advancement has mostly flatlined since nan summer.
Investors person steadily dialed backmost their expectations arsenic cardinal slope officials awesome they are successful nary unreserved to cut, and that incoming economical information will guideline their decision.
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Hiking liking rates creates higher rates connected user and business loans, which past slows nan system by forcing employers to trim backmost connected spending. Higher rates person helped push nan mean complaint connected a 30-year owe supra 8% for nan first clip successful decades. Borrowing costs for everything from location equity lines of credit, car loans and in installments cards person besides spiked.
Pedestrians adjacent nan U.S. Treasury building successful Washington, D.C., connected Dec. 30, 2022. (Ting Shen/Bloomberg via / Getty Images)
Yet nan accelerated emergence successful rates has not stopped consumers from spending aliases businesses from hiring, buoying hopes connected Wall Street that nan U.S. system tin avert a recession. Additionally, nan S&P 500, nan broadest measurement of nan U.S. banal market, is hovering astatine an all-time high.
Dimon, however, sounded a much skeptical statement astir nan likelihood of a soft landing.
| JPM | JPMORGAN CHASE & CO. | 197.45 | +1.80 | +0.92% |
| I:DJI | DOW JONES AVERAGES | 38917.42 | +13.38 | +0.03% |
| I:COMP | NASDAQ COMPOSITE INDEX | 16260.184446 | +11.66 | +0.07% |
| SP500 | S&P 500 | 5204.9 | +0.56 | +0.01% |
"These markets look to beryllium pricing successful astatine a 70% to 80% chance of a soft landing – humble maturation on pinch declining ostentation and liking rates," he wrote. "I judge nan likelihood are a batch little than that."
Although nan system has proven to beryllium resilient, Dimon expressed interest that nan authorities is helping to support it afloat pinch large amounts of spending.
The deficits today, he said, "are moreover larger and occurring successful roar times – not arsenic nan consequence of a recession – and they person been supported by quantitative easing, which was ne'er done earlier nan awesome financial crisis."
Dimon besides touched connected nan imaginable effect that AI has to toggle shape nan economy, and nan world.
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"We are wholly convinced nan consequences will beryllium bonzer and perchance arsenic transformational arsenic immoderate of nan awesome technological inventions of nan past respective 100 years: Think nan printing press, nan steam engine, electricity, computing and nan Internet, among others," he wrote.
