JPMorgan’s Jamie Dimon says the post-COVID economic boom could last until 2023

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The head of JPMorgan says the United States is looking at a post-coronavirus economic boom that could last for two years.

Jamie Dimon, JPMorgan’s Chief Executive Officer, revealed in a 65-page letter to investors Wednesday that the U.S. economy was emerging from the pandemic to a boom that could last until 2023 if federal spending continues.

Dimon said the potential boom was in part due to the federal government’s stimulus measures, increased consumer savings, successful vaccines and “ euphoria around the end of the pandemic. ”

I have no doubt that with excess savings, new stimulus savings, massive deficit spending, more QE (quantitative easing), a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy is likely to boom , ‘Wrote Dimon in his annual letter to shareholders.

‘This boom could easily continue into 2023, as all expenditures could continue well into 2023.’

Jamie Dimon, JPMorgan's Chief Executive Officer, revealed in a 65-page letter to investors Wednesday that the U.S. economy was emerging from the pandemic to a boom that could last until 2023 if federal spending continues.

Jamie Dimon, JPMorgan’s Chief Executive Officer, revealed in a 65-page letter to investors Wednesday that the U.S. economy was emerging from the pandemic to a boom that could last until 2023 if federal spending continues.

Dimon, the long-standing CEO of America’s largest bank, is widely seen as the face of the American banking industry.

He guided JPMorgan through the 2008 financial crisis.

Dimon, who is a Democrat and a backer of Barack Obama, praised the US administration for its “unprecedented speed” when it realized that COVID-19 would shut down large swaths of the global economies.

Without mentioning the Trump administration by name, Dimon said bold action by the Fed and the government “effectively reversed the financial panic.”

He said federal stimulus packages for Americans have mitigated the deterioration in the economy and unemployment.

Dimon also said the banking system is “ in great shape in this crisis, ” which meant they could help.

“The Federal Reserve (critically, with the backing of the US Treasury) immediately rolled out facilities that funded Treasury Bills, corporate bonds, mortgage-backed securities and other securities that could effectively reverse the financial panic,” he wrote.

Most importantly, Congress also took immediate action to introduce fiscal stimulus measures, the Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, totaling $ 2.2 trillion.

The graph above from Dimon's report shows that for the US, actual QE in 2020 and projected QE for 2021 total $ 4.6 trillion or nearly 25 percent of GDP.  Deficit spending for the combined two years is estimated to total $ 6.8 trillion, or about 35 percent of GDP

The graph above from Dimon's report shows that for the US, actual QE in 2020 and projected QE for 2021 total $ 4.6 trillion or nearly 25 percent of GDP.  Deficit spending for the combined two years is estimated to total $ 6.8 trillion, or about 35 percent of GDP

The graph above from Dimon’s report shows that for the US, actual QE in 2020 and projected QE for 2021 total $ 4.6 trillion or nearly 25 percent of GDP. Deficit spending for the combined two years is estimated to total $ 6.8 trillion, or about 35 percent of GDP

Dimon, the long-standing CEO of America's largest bank, is widely seen as the face of the American banking industry.  He guided JPMorgan through the 2008 financial crisis

Dimon, the long-standing CEO of America's largest bank, is widely seen as the face of the American banking industry.  He guided JPMorgan through the 2008 financial crisis

Dimon, the long-standing CEO of America’s largest bank, is widely seen as the face of the American banking industry. He guided JPMorgan through the 2008 financial crisis

In addition, he said the average balance of American consumers during the pandemic was in great shape.

‘The influence of the consumer is lower than it has been in forty years. In fact, ahead of the latest $ 1.9 trillion stimulus package, we estimate that consumers had additional savings of about $ 2 trillion, ” Dimon wrote.

Companies also have an extraordinary amount of cash on their balance sheets, estimated at about $ 3 trillion. The financial system and investors have already introduced more conservative leverage requirements due to regulations, so they have very little need to reduce leverage. ‘

Dimon said it could result in a “Goldilocks moment” for the US economy.

‘We don’t know what the future holds and it is possible that we will have a Goldilocks moment – rapid and sustained growth, inflation rising slowly (but not too much) and interest rates rising (but not too much),’ He wrote.

A booming economy makes managing US debt much easier and makes it much easier for the Fed to reverse QE (quantitative easing) and hike interest rates – as this could cause a bit of turmoil in the market, but it will a bustling economy. ‘

He goes on to write: ‘The lasting effect of this boom will only become fully known when we see the quality, effectiveness and sustainability of the infrastructure and other government investments.

‘I hope there is extraordinary discipline in the use of all this money. If spent wisely, it will create more economic opportunities for everyone. ‘

Dimon also used his letter, published on the bank’s website, to share his views on the country’s economic health and to push for policies to tackle inequality and immigration and improve the criminal justice system.

Real gross domestic product (GDP) rose 4.3 percent year-on-year in the fourth quarter of 2020, reflecting both the ongoing economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic

Real gross domestic product (GDP) rose 4.3 percent year-on-year in the fourth quarter of 2020, reflecting both the ongoing economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic

Real gross domestic product (GDP) rose 4.3 percent year-on-year in the fourth quarter of 2020, reflecting both the ongoing economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic

Dimon said federal stimulus packages for Americans have mitigated the deterioration in the economy and unemployment.  The unemployment rate was 6 percent last month, compared to a record high of 14.8 percent in April last year

Dimon said federal stimulus packages for Americans have mitigated the deterioration in the economy and unemployment.  The unemployment rate was 6 percent last month, compared to a record high of 14.8 percent in April last year

Dimon said federal stimulus packages for Americans have mitigated the deterioration in the economy and unemployment. The unemployment rate was 6 percent last month, compared to a record high of 14.8 percent in April last year

While the average US consumer’s finances are “excellent” and the stock market’s high valuations are warranted, the price of US Treasuries is not, Dimon said.

The economic growth he anticipates the US could see over the next two years will create opportunities to “deal with issues arising from inequality,” Dimon wrote.

He called for raising the federal minimum wage, improving training for high school and college jobs, and making it easier for people with criminal records to get jobs.

Dimon also called for increased availability and affordability of housing and for policies specific to black and Hispanic communities severely affected by the pandemic.

“We need to address recruitment and advancement targets, help develop small minority-owned businesses, and improve financial education products for those without a bank. In addition, small minority-owned businesses, which employ nearly 9 million people and generate $ 1 trillion in annual economic output, have been particularly hard hit by COVID-19 and will need serious help in the future, including capital to restart their business. to start and run. ‘ He wrote.

‘We should consider requiring businesses, such as supermarkets, pharmacies and other retailers, to provide branches in low-income neighborhoods, as banks should (this would reduce the cost of goods bought by minorities and reduce local recruitment and increase involvement). These efforts would provide a form of redress for the low-income community that is sustainable and empowering. ‘

Dimon, who has called for higher taxes to pay federal stimulus measures, said companies could support many of these initiatives if the government enforced rigorous budgeting, transparency and discipline when it comes to its spending.

“We must not forget that the concepts of free enterprise, rugged individualism and entrepreneurship are not incompatible with meaningful safety nets and the desire to eliminate our underprivileged citizens,” Dimon wrote.