Jamie Dimon, the chief executive of JPMorgan Chase, on Friday warned of a “worrying” global landscape, highlighting a range of pressures including war, rising geopolitical tensions and inflation that threaten the economy and could weigh on the performance of the country’s biggest bank.
Mr. Dimon’s remarks, made at the same time as his bank’s quarterly earnings report – which showed weakness in some parts of the business – add to his worries about the US economy as the Federal Reserve grapples with when or whether to cut interest rates. interest rates, particularly in light of this week’s warmer-than-expected inflation data.
On a call with reporters on Friday, Mr. Dimon underscored his anxiety, describing the heady financial markets as “very happy.” He said he could not predict whether the economy would enter a recession, but that “the potential for bad outcomes is greater than people think.”
Mr. Dimon is the most prominent banking leader. Not only does JPMorgan have exposure to all corners of the global economy, but he is the only head of a major bank since the 2008 financial crisis, and his pronouncements are closely watched on Wall Street and in Washington. He was the only head of a major US lender to attend this week’s White House state dinner for Japan’s prime minister.
His sadness, however, was also consistently at odds with strong financial markets. At the end of 2022, for example, he predicted economic growth and possibly a severe recession for the following year. In contrast, the US economy boomed in 2023.
Indeed, Citigroup CFO Mark Mason, speaking on Friday as his own bank reported earnings, took a relatively rosy view. Mr Mason described the global economy as “resilient” and said that while Citi expected economic growth to slow throughout the year, strong consumer spending and employment data were reasons for optimism.
JPMorgan reported first-quarter earnings of more than $13 billion and nearly $42 billion in revenue, both better than analysts expected. But it said there was a drop in deposits as customers sought to invest their money instead of leaving it in checking and savings accounts, and warned of higher costs in the future. JPMorgan also revealed an unexpectedly sharp drop in so-called net interest income, a closely watched financial metric that essentially measures how much money it can make from lending.
Wells Fargo, the nation’s third-largest bank, reported earnings separately on Friday that also included a decline in that measure. It posted quarterly profit of $4.6 billion, down 7% from the same period last year. The bank’s average deposits also fell and the number of new loans it took out fell compared to last year, partly because of moves by its leaders to reduce mortgage lending.
Shares of both banks were lower early Friday.
Many economists predicted that this year would bring a so-called “soft landing,” or a gentle easing in growth and inflation that would allow the Federal Reserve to cut interest rates in a smooth fashion.
Now, with little sign of a slowdown, it is unclear whether the central bank will make the three rate cuts that officials had forecast for the year. Mr. Dimon was among the few bank leaders who said they were bracing for the possibility that interest rates would rise again, a move that would indicate more extreme inflation than is currently being measured.
Mr. Dimon made more sweeping remarks about the challenging environment in his annual letter to shareholders this week. He laments, as before, that the United States is involved in deficit spending and rattled off a list of complaints about where public and private sector leaders are falling short. (“Social media could do more,” he wrote.) Referring to Russia’s invasion of Ukraine and other crises, he wrote that recent events “may well create risks that could eclipse anything post-WWII World War”.
On Friday, he said the issue on his mind was “the future of the free world.”
Emily Flitter contributed to this report.
