Despite the horrendous beating that the U.S. economy has taken as a result of the lockdowns that have been imposed on Americans in response to the coronavirus pandemic, JPMorgan CEO Jamie Dimon appears to be extremely optimistic.
Indeed, he appears to be confident that once the pandemic ends, the U.S. will enter into a surging economic boom that may last all the way into 2023.
Are We Headed for a Boom Period?
In the annual letter written to JPMorgan Chase & Co. shareholders, Dimon sounded a note of reassuring and reasoned optimism. “I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” he said.
Indeed, he suggested that “[t]his boom could easily run into 2023.”
Simon went on to describe how he believed that federal unemployment and economic aid programs of unprecedented size and scale have blunted much of the economic damage wrought by the pandemic. With all of the stimulus money that the government has thrown at both businesses and individuals, there is likely a great deal of savings out there, meaning that banks are awash in liquidity which they could lend out to help people drive lots of economic activity once the pandemic and the lockdowns end.
One thing which reinforced Dimon’s optimistic view is that American consumers appear to have primarily used their stimulus money to pay off their debts.
Therefore, when the economy resumes humming along at full capacity, people will no longer be as burdened by debt and will therefore be able to spend a greater proportion of their incomes on consumption.
Thanks to continuous injections of money into the banking system by the Federal Reserve — so-called “quantitative easing” — banks now have an incredible $3 trillion in reserves which they will be happy to lend out once the proper opportunities present themselves
While Dimon acknowledged that additional mutations of the virus might lead to an extension of the lockdowns and their associated economic pain, he pointed out that this combination of facts together implied the strong possibility of enormous economic growth going forward.
Dimon’s shareholder letter, which was 65 pages long and included a page of footnotes, was his longest yet. As Dimon operates one of the largest and most successful banking and investment firms on the planet, those feeling uneasy about America’s future economic prospects would do well to take heart from his analysis.
His letter also explained that financial tech firms have been on the ascendancy and present a significant threat to banks and other more traditional service providers going forward. “Banks have enormous competitive threats — from virtually every angle. Fintech and Big Tech are here… big time!”
Therefore, mixing his great confidence about the U.S. economy as a whole with more cautious optimism about the prospects for his own company, he said, “While I am still confident that JPMorgan Chase can grown and earn a good return for its shareholders, the competition will be intense and we must get faster and be more creative.”