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Jamie Dimon's outlook on the US economy, AI and geopolitical risks

NEW YORK (`) — The country's most influential banker, JPMorgan Chase CEO Jamie Dimon, told investors that he continues to expect the U.S. economy to be resilient and grow this year. But he fears that geopolitical events such as the war in Ukraine and the war between Israel and Hamas, as well as political polarization in the United States, could create an environment that “could very well create risks that dwarf anything since World War II.” could provide”.

The comments came in an annual letter to shareholders from Dimon, who often uses the letter to weigh in on broad topics like politics, regulation and global events and explain what they could mean for JPMorgan Chase and the economy as a whole.

Dimon also used his letter to vigorously defend the company's diversity and equality efforts, rejecting arguments from Republicans who said such efforts at Fortune 500 companies, colleges and universities were discriminatory and promoted left-wing ideology.

“America’s global leadership is being challenged externally by other nations and internally by our polarized electorate,” Dimon said. “We must find ways to put aside our differences and work together with other Western nations in the name of democracy. In this time of great crisis, working together to protect our fundamental freedoms, including free enterprise, is paramount.”

Dimon had particular concerns about the continued high levels of deficit spending by the U.S. government and other countries, as well as the need for countries like the U.S. to remilitarize and further expand their green infrastructure, all of which are likely to keep inflation higher than investors expect.

Because of these issues, Dimon said he was less optimistic that the U.S. economy would achieve a “soft landing,” which he defined as modest growth along with falling inflation and falling interest rates compared to the broader market. While he says investors are pricing in a “70 to 80 percent” chance of a soft landing, Dimon believes the chances of such an ideal outcome are “much lower.”

Even at a time when some investors and economists are questioning whether the Federal Reserve can meet its forecast of three rate cuts this year, Dimon warned of the possibility of rates rising to 8% or more. The Fed's key interest rate is currently in a range of 5.25% to 5.50%.

“These significant and somewhat unprecedented forces cause us to remain cautious,” he said.

As in previous letters, Dimon said he remains convinced that the U.S. must achieve significant leadership in the world through trade, military power and a resilient economy supported by strong infrastructure spending. He has long argued that the United States must continue to maintain its leadership role in the West or it will eventually cede that role to China as an authoritarian superpower. This also includes continuing to support Ukraine in its war against Russia, argued Dimon.

“Ukraine needs our help immediately, but it is important to understand that much of the money America sends to Ukraine is intended for the purchase of weapons and equipment, most of which are built in America. Our assistance not only benefits Ukraine, but also goes directly to American manufacturers, helping the country rebuild our military-industrial capabilities for the next generation.”

Like many other CEOs, Dimon said he sees promising opportunities in artificial intelligence use cases. The bank has found 400 use cases for AI so far, Dimon said, particularly in the bank's marketing, fraud and risk departments. The bank is also exploring the use of AI in software development and general employee productivity plans.

“We firmly believe that the consequences (of AI) will be extraordinary and potentially as transformative as some of the most important technological inventions of the last few centuries: think, among others, of the printing press, the steam engine, electricity, computers and the Internet.” .”

Of the 61-page letter, Dimon dedicated four pages to the bank's diversity and inclusion work. His vocal defense of the bank's DEI initiatives comes at a time when shareholder and political activists have called such programs a waste of company resources. Dimon argued that JPMorgan – as the country's largest bank – should do as much as possible to stimulate all parts of the economy.

“We believe – and we are unashamed – that it is our duty to contribute to the upliftment of the communities and countries in which we do business,” Dimon said. “We believe this increases business and the overall economic well-being of these communities and countries, as well as increasing long-term shareholder value.”

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