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

- Jamie Dimon, thank you so much for sitting down with us today. I spent a lot of time this weekend reading your letter, and my main takeaway was that you have a very clear idea of ​​what's good for America, what's good for the economy, and what's good for JPMorgan. What in your mind is the biggest threat to that secure vision? - So every year when I write that letter, I try to think about what the most important things are, and I would add to that the free Western world because that's what worries me the most, you know, the war in Ukraine. , the terrorist activities in Israel, you know, the thread that that is drawing between Russia, Iran, North Korea, China, the difficulties of our time with China, all of that is a challenge, we would call it the free and democratic Western world.

And that for me is the most important thing: that we do everything well. - I want to return to the geopolitical context in a minute, but right now I want to focus specifically on the economy. As CEO of America's largest bank, you have unparalleled insight into the financial health of the American consumer. What are people doing with their money right now? - You have to see it in a little context. The consumer is in pretty good shape right now. Unemployment is below 4% and has been there for two years. House prices are up, stock prices are up, jobs are plentiful, wages are good, rising on the low end.

The consumer is in pretty good shape. The only thing to be careful about is that much of this is driven solely by tax spending. Even today, the deficit of 6% of GDP, almost $2 trillion, drives much of this growth. And that will possibly have other consequences in the future, you know, called inflation, which may not go away as people hope. So when I look at the variety of possible outcomes, you know, you can have that

soft

landing

. I'm a little more worried that it won't be as smooth and that inflation won't go away like people hope. I'm not just talking about this year, I'm talking about the 25th and 26th.

Rates may have to go up a little more. I mean the 10-year rate, the five-year rate, and you know, that can have consequences. Then we'll see. - But right now you describe a fairly optimistic outlook and, even so, we know that consumers do not feel it. Why this disconnection? - Yes, well, here you have to look at different consumers. So America's poorest 20% haven't fared particularly well over the last 20 years. Revenue barely increased. Remember, suicide, fentanyl, crime, inflation, there are many negative effects. Some people can't get mortgages, can't buy their house. So yes, there is a part of society that is fighting and there is a part of society that is not.

And I think that's a different question about how we approach politics. But you can see why this bothers people. - So let's go back to the

soft

landing

. In the letter, you admit that you were on the side of the hawks, but then things developed in a more benign way. But it's still a slightly grudging concession. You yourself sound quite sad in the letter. Can you tell us a little 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 is the range of possible outcomes?

And last year and this year it would publish the same numbers. A huge amount of fiscal deficit, a huge amount of QE, a lot of inflationary things in the future, the green economy, the remilitarization of the world. Obviously, the deficits, which are basically not going away as far as the eye can see, and geopolitics. All of that puts me on the side of caution that things may not go as well as people hope, but the odds of a soft landing, the market is trading at 70%, I think is half of that. As a business person, I try to be prepared for all of that.

Just a little caution. It seems a little more like the '70s to me. And I point out to a lot of people that things seemed pretty rosy in 1972. They weren't rosy in 1973. So don't get lulled into a false sense of security because Today seems to be fine and tomorrow will be fine. So I just try to separate the two. - Continuing with today then, is Bidenomics working? - Partially. You know, when you spend that kind of money, you will have growth and we needed some of that, as part of industrial policy. I think the infrastructure is fantastic.

That was bipartisan. Other things will remain to be seen. And I think some of the American public looks at it and wonders, what are they getting? So if you go to rural America or inner cities, I'm not sure they feel like this economy is driving them. - Do you think Jerome Powell is doing a good job as chairman of the Federal Reserve? - I have tremendous respect for Jay. I think the Fed was probably slow to raise rates. They caught up with him. They're probably right to look right now. We don't know what's going to happen.

You might as well wait. We also don't know the full effect of QE. Again, I'm a little more cautious about this. Most people have the 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. - Moving now to geopolitics. We have wars 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 the United States' position on the war between Israel and Hamas is correct? - I believe that 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 that. So I don't know the details of the army. I think the idea that they are not going to defend themselves is wrong. So I'll let the military experts decide what the right way to do it is. All the generals that I've seen on TV, and I've talked to several, you know, the conflict in the city is really bad and, you know, it's door to door, a higher number of civilian casualties.

Hamas must have known there would be a big reaction to what they did. By the way, it is unjustifiable for any reason. So I want to be clear about that. - And then we also have a war in Ukraine, where Ukraine is clearly fighting against Russia. What would it mean for the global economy if Russia won? - 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, that maybe having nuclear weapons is a 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 that many people will decide: Will the United States defend Europe? Can you trust them? And if you can't trust them, what are you going to do? And that includes the

economic

. That's why I talk about the economic battlefield and the battlefield. So economically, each nation can say what makes me feel safe? What gives me security in energy, food and everything I need? So I'm a little worried that if Russia wins that war, we'll see the world go into a little bit of chaos as people realign alliances and economic relationships and so on. - So China is complicated, obviously, because, on the one hand, we have a lot of trade with China and the supply chains are integrated.

But at the same time, we recently reported that China is helping the Russian war effort and now there is a US proposal to sanction Chinese banks. How should the United States approach China? - You know, I would tell America to take a deep breath. We have all the food, war and energy we need. The Atlantic and the Pacific, there are no wars in North America, South America. China imports 11 million barrels of oil a day. They are a very complicated neighbor. His own actions are causing all his neighbors to rearm. Their GDP per person is 15,000 dollars, compared to 80 ours.

So we are in a very good position. We have to restructure trade around national security. They need oil and gas. So I think LNG is very important strategically. So I would negotiate with them on all that and I'm glad they're doing that. As long as Ukraine is there and does something to aid and abet, I think it will be very difficult to have a good relationship with them. I'm glad the government has the authority to do certain things. If, in fact, some of these things are true, yes, they should impose some sanctions, but, by the way, they should expect some in return. - I want to address internal affairs and the upcoming elections.

We are in the very unusual position of knowing what a Trump presidency is like. We know what a Biden presidency is like. Who is the best candidate for the economy for 2024? - Okay, I'm not going to get into that kind of stuff now. And whoever the president is, we will try to help. I would like them to put many experts around them. Not just academics, but professionals in the real world because I think it's important. - How about you as one of the experts? I know his name has come up in the context of a new chairman of the Federal Reserve. - I would not make him president of the Federal Reserve, nor secretary of the Treasury.

I don't think I was ever chosen for that. - Okay, you're not a politician, but you're a CEO and obviously there are a lot of pressures at work. 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. - If I dont 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 they took me into the operating room for the dissection, I knew it was like 50-50 and I didn't regret it because people were always like, "Do you regret it?" I say no, and the only thing I would say is that I want to help this country and the world and the free Western world. That's in my mind and maybe it's changed a little. - Yes. He's been CEO for 18 years and he's 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 is all very open, we share everything. I move them in ways they wouldn't hear me do anywhere else. They respond with emotions, you know, "You're wrong. You didn't read it correctly or you missed this important point." So it's a very open conversation. I don't think any of those people are intimidated by me. And there's very little conversation after the fact, like, okay, "I didn't want to bring this up in front of everyone." They are brave enough to mention it in front of anyone.

And I've had people, three of them come up and say, "Jamie, you're making a mistake. Sit down, we want to explain it to you. Don't say anything." I say, "Okay, leave it to me." So you try to create a very open environment. And we have regulators, auditors, the press. Believe me, we get a lot of comments from a lot of people. - Just to get back to the current news cycle with these polarizing issues in the United States. Do you think that's the kind of thing that CEOs like you should be discussing publicly or making statements as a company? - The answer is yes if it is appropriate and you know how to do it.

So, you know, in my letter it's pretty clear: I'm like a patriotic, red-blooded, passionate free-enterprise capitalist. And I'm shameless and shameless. I also recognize that we have 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. That is why we will support the LGBT community. We will absolutely support free, fair and secure voting when it comes to improving other sectors of society. - So I have some final questions here. They are short questions that require short answers. - Well. - How many days should people be in the office? - Five is ideal. - Are America's urban centers dead? - No, I think some are going to have difficulties with their own policies, but no. - If you are young and want to work at JPMorgan, what should you study at university? - It almost doesn't matter to tell you the truth because you are looking for intelligent, ethical and decent people.

I think in business you should learn the language of your business, which is accounting, and learn a little bit of basic business. So I think it would be useful 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 told me: "Dad, you need more hobbies." I love my family. So we have a lot of family dinners when I'm around. We walk together, we take vacations together. I love wine, I love music. And I started playing squashagain, which still worries me, but I'll do it. - What is your morning routine? - Okay, I usually wake up at 4:30 or 5:00.

I read five articles, you'll be glad to know, in a very specific way. So I flip through The Post, I read the front page of The Washington Post, then I read the front page of The New York Times, cover to cover, everything. I read your business section, which is not very good. Then I read the front page of the Wall Street Journal, then the Exchange, then the FT. And the reason I do FT at the end is because everyone else is so biased towards America. So I like to read, I do it for hours in the morning, but then I like to do a little exercise and go to the office. - And do you ever turn off your phone? - I'm not a fan of the phone.

I don't even have it here, I have it outside, but I think people should spend a little less time on that, a little more time thinking. But I'm not on any social media. Every year I try it. I literally continue for just a week to see what everyone else is doing. You know, Reels, Instagram, Facebook and TikTok and then I click out. - Never tempted. - No. - Okay, well, Jamie Dimon, thank you very much indeed. - Emma, ​​​​it was a pleasure. Thank you.