Jamie Dimon, the CEO of JPMorgan Chase, warned on Friday of a “worrying” global situation, pointing to a cascade of stresses including war, rising geopolitical tensions and inflation that could threaten the economy and hurt the performance of the country's largest bank.
Mr. Dimon's comments, made at the same time as his bank's quarterly earnings report – which showed weakness in some areas of the business – add to his litany of worries about the U.S. economy as the Federal Reserve wrestles with when and whether to raise interest rates lower, particularly given this week's hotter than expected inflation data.
On a call with reporters on Friday, Mr. Dimon underscored his concerns, describing turbulent financial markets as “too happy.” He said he couldn't predict whether the economy would fall into a recession, but that “the likelihood of bad outcomes is higher than people think.”
Mr. Dimon is the most prominent bank boss, and his comments are closely watched on Wall Street and in Washington. He was the only head of a major American lender to attend the White House state dinner for the Japanese prime minister this week.
However, his gloomy mood was always at odds with the strong financial markets. For example, at the end of 2022 he predicted economic setbacks and possibly a severe recession next year; Instead, the American economy boomed in 2023.
JPMorgan's financial performance was hit by more mundane issues. The bank reported first-quarter profits of more than $13 billion and revenue of nearly $42 billion, both better than expected. But average customer deposits fell and the company warned of higher spending in the future. JPMorgan also reported a decline in its so-called net interest income, a closely watched financial measure that essentially measures how much money the company can make from lending.
Wells Fargo, the country's third-largest bank, separately reported earnings on Friday that also included a decline in that measure. Shares of both banks were lower in early trading before markets opened on Friday.
Many economists predicted that this year would bring a so-called soft landing, or gentle moderation, in growth and inflation that would allow the Federal Reserve to cut interest rates in an orderly manner.
With little sign of a slowdown, it is unclear whether the central bank will make the three interest rate cuts that officials had predicted this year. Mr. Dimon was among the few who said they were preparing for the possibility of another rate hike, a move that would indicate more extreme inflation than currently measured.
Mr. Dimon made more detailed comments about the difficult environment in his annual letter to shareholders this week. He complained, as he had before, that the United States was deficit spending and ticked off a list of complaints about where public and private leaders had fallen short. (“Social media could do more,” he wrote.) Referring to Russia’s invasion of Ukraine and other crises, he wrote that recent events “could well create risks that could dwarf anything since World War II. “
On Friday he said the issue on his mind was “the future of the free world.”
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