June 1 (Reuters) – Jamie Dimon, chairman and chief executive of JPMorgan Chase & Co (JPM.N), described the challenges facing the US economy that resemble a “hurricane” in the future and called for the Federal Reserve to take vigorous action to avoid plunging the world’s largest economy into recession.
Dimon’s comments come a day after President Joe Biden met with Federal Reserve Chair Jerome Powell to discuss inflation hovering at a 40-year high. Continue reading
“It’s a hurricane,” Dimon told a banking conference, adding that the current situation is unprecedented. “Right now it’s kind of sunny, things are going well. Everyone thinks the Fed can handle this. This hurricane is coming right down the road. We just don’t know if it’s a minor or superstorm Sandy,” he added.
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The Fed is under pressure to take decisive action to contain an inflation rate that has more than tripled its 2% target and has pushed up the cost of living for Americans. It faces a difficult task of containing demand enough to contain inflation without triggering a recession. Continue reading
“The Fed must now counter this with rate hikes and QT (quantitative tightening). I think they need to do QT. They don’t have a choice because there is so much liquidity in the system,” Dimon said.
The major central banks, already plotting rate hikes to fight inflation, are also preparing a collective pullback from major financial markets in a first-ever round of global quantitative tightening expected to curb lending and further undermine the already sluggish global economy pressure. Continue reading
The inflationary battle has become the focus of President Joe Biden’s June agenda amid his flagging opinion polls and ahead of November’s congressional election. Continue reading
Wells Fargo & Co (WFC.N) CEO warned that managing a soft landing in the economy would be “extremely difficult” for the Federal Reserve as the central bank seeks to quench the inflationary fire with rate hikes.
The CEO of the fourth largest US lender also said that Wells Fargo sees a direct impact of inflation on consumer spending, particularly on fuel and groceries.
“The soft landing scenario is…extremely difficult to achieve in the environment in which we find ourselves today,” Wells Fargo Chief Executive Officer Charlie Scharf said at the conference.
“The economy needs to slow down to tame inflation. If there’s a brief recession, it’s not too deep…there will be some pain as you go through it, overall everyone will be fine when you emerge from it,” he added.
Scharf said while consumer spending is strong overall, growth is slowing.
“Businesses are still spending where they can, increasing inventories…we expect consumers and ultimately businesses to weaken, which is part of what the Fed is trying to engineer, but hopefully in a constructive way,” added he added.
Recent Fed reports and surveys reported households in average financial strength, with well-working families and unemployment at levels more akin to the boom years of the 1950s and 1960s. Wages for many low-skill jobs are rising, and bank accounts, on average, are still stocked with cash from coronavirus relief programs.
But confidence has waned, and a recent Reuters/Ipsos poll put the economy at the top of respondents’ list of concerns.
“I don’t think our crystal ball is necessarily better than others compared to the macro later this year 2023, 2024. We’re clearly going to see a different impact on different companies with the Fed’s actions,” GE CEO Larry Culp told the same conference.
(This story is refiled to correct typos in paragraph 2.)
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Reporting by Elizabeth Dilts Niket Nishant Additional reporting by Rajesh Singh Writing by Denny Thomas Editing by Nick Zieminski
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