The Journal. - JP Morgan CEO Jamie Dimon on What's Next for the Economy

Episode Date: April 26, 2024

Jamie Dimon discusses his concerns about the future of the economy, the effect of overseas wars and the importance of U.S. leadership in a wide-ranging interview with WSJ’s Editor-in-Chief Emma Tucker. Further Watching: -Jamie Dimon on the Economy, Geopolitical Risks and AI: Full Interview  Further Listening: -Why the Fed Is Steering Away From Rate Cuts  -Janet Yellen on Inflation and the U.S. Economy  Learn more about your ad choices. Visit megaphone.fm/adchoices

Every year, the chief executive of JPMorgan Chase, Jamie Dimon, writes a letter to shareholders. And a lot of people are interested in what he says. This morning, the leader of the nation's largest bank, JPMorgan Chase, is sounding the alarm that inflation could soar beyond 8% in the coming years. Jamie Dimon telling investors in his annual 2023 annual shareholder letter that markets should be prepared for turbulence. J.P. Morgan, CEO of Jamie Dimon's annual letter to shareholders out yesterday, questioning the Federal Reserve's outlook for a soft landing. Over the last year, the Federal Reserve has been trying to bring down inflation without triggering a recession, a so-called soft landing.

But Dimon is skeptical. He thinks inflation could be much harder to contain. To understand why, our editor-in-chief Emma Tucker spoke with Dimon earlier this week in a wide-ranging interview. Right. So, Jamie Dimon, thank week in a wide-ranging interview. Right. So, Jamie Dimon, thank you very much for sitting down with us today. I spent a lot of time this weekend reading your letter. And my biggest takeaway from it was that you have a very clear sense of what's good for America, what's good for the economy, and what's good for J.P. Morgan.

So, I've got some questions here. They're short questions that require short answers. Okay, I'll try. Off I go. How many days should people be in the office? Five is ideal. There are some jobs where taking a day or two at home is fine. It's very job specific.

Are America's downtowns dead? No. I think some are going to have difficulty with their own policies, but no. If you're a young person and you want to work at J.P. Morgan, what should you study at college? It almost doesn't matter, to tell you the truth, because you're looking for smart, ethical, decent people. But I do think in business, you should learn the language of business, which is accounting, and learn a little basic business. So I think it would help to do accounting, finance, markets, something like that.

Their conversation went beyond career advice. They dug into the presidential election, into geopolitics, and of course, whether there will actually be a soft landing. Welcome to The Journal, our show about money, business, and power. I'm Kate Linebaugh. It's Friday, April 26th. Coming up on the show, an interview with JPMorgan Chase CEO, Jamie Dimon. Attention all soccer fans. From Orlando to Los Angeles, take to the fields of the USA for your next vacation.

Ready to kick off? Discover exciting games and events. Plus, find amazing hidden gems in cities full of adventures, delicious food, and diverse cultures. You'll love it so much you'll want to extend your stay beyond the matches. Get the ball rolling on your soccer getaway. Head to visittheusa.com. DANIELLE DIMARTINO BOOTH, As the chief exec of America's biggest bank, you have an unrivaled insight into the financial health of the US consumer. What are people doing with their money right now? DAVID BROOKS GERMANY, CEO, As the chief exec of America's biggest bank, you have an unrivaled

insight into the financial health of the US consumer. What are people doing with their money right now? DANIELLE DIMARTINO BOOTH, CEO, As the chief exec of America's biggest bank, you have an unrivaled insight into the financial health of the US consumer. What are people in pretty good shape right now. The consumer has unemployment under 4%. It's been there for two years. They still have excess money from COVID. If you go back to looking at the amount of money that was spent during COVID, it was $6 trillion through various means and various programs. They're still spending it down. Housing prices are up.

Stock prices are up. Jobs are plentiful. Wages are finally going up at the low end. The consumer is in pretty good shape. Because of that, business is in pretty good shape, too, because people spend. It creates profits. And I would say the one thing you got to be cautious about, a lot of it is driven by just fiscal spending.

That's driving a lot of this growth. And that will have other consequences possibly down the road called inflation, which may not go away like people expect. So when I look at the range of possible outcomes, you can have that soft landing. I'm a little more worried that it may not be so soft and inflation may not quite go away people expect. I'm not talking about just this year. I'm talking about 2025 and 2026.

The rates may have to go up a little higher. I'm talking about the 10-year rate, the 5-year rate. And that could have consequences. So we'll see. But right now, you describe a pretty rosy picture, and yet we know consumers aren't feeling it. They're not, they're feeling glum. Why this disconnect? Yeah.

Well, you have to look at different consumers here. So the bottom 20% of America have not done particularly well over the last 20 years. Incomes barely went up. They're actually starting to go for the first time in almost 20 years. Remember, suicide, fentanyl, crime, inflation. There are a lot of negative effects. Some people can't get mortgages, can't buy the home. So yeah, there's part of society who's kind of struggling.

There's part of society who's not. So just to go back to the soft landing, in the letter, you concede you were on the hawkish side, but then things played out in a more benign fashion. But you're still, it's a slightly begrudging concession. You're still on the, you yourself sound quite glum in the letter. Can you tell us a bit more about why that is? So look at, I'm not looking at a year. I'm not making a forecast. I'm trying to say, what are the range of possible outcomes?

And last year and this year? I would put out the same issues Huge amount of fiscal deficit a lot of things in the future inflationary the green economy the remilitarization of the world obviously the deficits which you know, basically I'm gonna go away as far as the eye can see and Geopolitics all that puts me on the side of caution that things may not go as well as people expect You know, we'll say but I don't really know, you know as a business person All that puts me on the side of caution that things may not go as well as people expect. We'll see. But I don't really know. As a business person, I try to be prepared for all of that.

It's just a little cautious. It looks a little bit more like the 70s to me. And I point out to a lot of people, things looked pretty rosy in 1972. They were not rosy in 1973. So don't get lulled into a false sense of security because the today looks OK, the tomorrow's going to be OK. Do you think Jerome Powell's doing a good job as chairman of the Fed? I have tremendous respect for Jay. I think the Fed was probably late in raising rates.

They caught up. They're probably waiting, right, and watching right now. We don't know what's going to happen. They might as well wait. It's very hard to forecast the future. I've always told the Fed, they should stop forecasting. I mean, obviously, the data dependent, you know, when someone makes a statement, you know, we're data dependent, we're going to say, no matter what the data says, do we want anyway? Well, they can't. So they should wait and see, but they may

have to get a little bit tougher. In his letter to shareholders, Diamond said the American economy is in a delicate balance, and the biggest threat to that balance comes from outside the country. That's what worries me the most is that, you know, the Ukraine war, the terrorist activities in Israel, you know, the threat that's drawing between Russia, Iran, North Korea, China, the difficulties of our relations with China, that whole thing is challenging. But, you know, we were called a free democratic Western world. And that to me is the most important thing, that we get all of that right. If we focus first on the Middle East,

do you think that the U.S. position towards the Israel-Hamas war is the right one? You know, I think Israel has the right to defend itself. I think war is a terrible thing. I think people have to be honest about what war is, when they look at the civilian deaths and all the things like that. So I don't know the specifics of the military. I think the notion that they aren't going to defend themselves is wrong. So I'll leave the military experts aside.

What's the right way to go do that? And then we've got war in Ukraine as well, where, you know, Ukraine clearly struggling against Russia. What would it mean for the global economy if Russia was to win? It would be, it could be, again, I'm going to put odds in this, it could be a potential disaster. Because, you know, this is the first war in Europe, a free democratic nation invaded by two or 300,000 Russian soldiers under the threat of nuclear blackmail.

Obviously NATO is rearming right now. But the other thing is affecting all alliances, so all military alliances, all global economic alliances, and the nexus of Iran, North Korea, and China makes it very hard in my view for the Chinese-American relationship because we're kind of on different sides of that. They say they're neutral, whether they're helping or not. We are clearly not neutral. So I'm a little worried that if Russia wins that war, you're going to see the world enter

a little bit of chaos as people realign alliances and economic relationships, etc. So China's complicated, obviously, because on the one hand, we have so much trade with China, the supply chains are integrated. But at the same time, we reported recently that China is aiding the Russian war effort, and there's now a proposal by the US to sanction Chinese banks. What do you make of that? I mean, what do you think of that approach to China? How should the U.S. approach China? You know, I would tell America, take a deep breath. China imports 11 million barrels of oil a day. I believe half of which go through the Red Sea or the Straits of Hormuz, which are guarded

by American warships. So, you know, we're in a very good position. We have to restructure trade around national security. It's kind of a no-brainer. very good position. We have to restructure trade around national security, kind of a no-brainer, like anything that we need for rare earths, for F-35s, you know, the ingredients for pharmaceuticals, semiconductor, important semiconductors, and related where it might be used for military purposes. You could put AI in there and lithium and some other things. Obviously, we should resource friendly sources, something like that. I would engage with China.

I would have very tough conversation about what we're willing to do, what we're not willing to do. I would do it with our allies in mind, not America, our way or the highway type of thing. And I don't want to tear us under the economic relationships either. So we should be very thoughtful. So I would negotiate them around all of that. I'm glad they're doing it. So if you listen to Tony Blinken and Jake Sullivan, Janet Yellen, they're starting to engage.

And they should, and they should be quite clear what we need, what we want. And we should listen to them. You know, they may have some legitimate issues and legitimate complaints. And do it as best we can. After the break, Jamie Dimon's thoughts on the presidential election. This ad was expressly recorded to create a sense of simplicity. Just a few simple sounds. No complexity. Like Neutral. Made with just vodka, soda, and natural flavor.

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Benefits vary by card. Terms apply. So, I want to turn now to domestic matters and the forthcoming election. We're in the very unusual position of knowing what a Trump presidency looks like. We know what a Biden presidency looks like. Who's the best candidate for the economy for 2024? OK, I'm not going to go into that kind of thing right now. And I, I'm, whoever is president, you know, we will try to help. I really would hope that whoever's president tries to reach out to the other side, you know, that Trump put some Democrats in his cabinet,

maybe Biden would put some Republicans as a candidate. I would like them to put a lot of experts around them, not just academic, but, you know, practitioners in the real world, because I think it matters, and to get policies right that are good for both America and the world. And that's what I would hope. How about you as one of the experts? I know you were, your name has come up in the context of a new Treasury Secretary. Or was it Fed Chairman? Sorry,

Fed Chairman. I would not do Fed Chairman, Treasury Secretary. I don't think I'd ever be picked for that. Still on the election, critics of Donald Trump, they don't just disagree with him. They think he's a threat to stability. He's a threat even to democracy. Is that—what do you make of that? Look, I obviously hear all that stuff. I—different people vote for— and this I know just from talking to a lot of people. We shouldn't ascribe to an individual

about why they're voting for a Donald Trump or a Joe Biden. They're doing it for different reasons than a very simple thing. Some do it because they think their growth is better, or regulations are better, or America first. They all have different reasons. I think people should learn to listen more, take a deep breath, try to, you know, think as a citizen and think about what's good

for the long-term health of the country, and that's what I hope people do. So you listen, you go on your tours around rural America. What do you hear when you go out and about in the US? DAVID BOOTH Yeah. People are worried. Like you pointed out, the economy is pretty good, but they're still worried. And like I said, there are legitimate reasons that there are groups of people who are angry.

Now, it doesn't mean their policies are right. It doesn't mean they're exactly right. But I think we should listen to them more. Why are inner city schools failing? Why have incomes didn't go up for 20 years? America grew, I think, a little less than 2% for 20 years. I think that's anemic. I think we should ask, why is that?

And why can't we do a better job for our veterans and veterans fans? Why can't we do a better job for kids that wherever you graduate, if you graduate high school, even if you don't graduate, that you have skills to get you a job making $50,000 or more? They're all there. It all can be done. They can all be fixed. And there's frustration. And just to bring it back to what's going on now, the current news cycle with these very polarizing issues in America, do you think that's the sort of thing that chief execs like you should comment on publicly or make statements as a company on? The answer is yes, if it's appropriate and you know how to do it.

So, you know, in my letter, it's quite clear. I'm like a full-throated, red-blooded, patriotic, free enterprise capitalist. And I'm unabashed and unashamed. I also acknowledge that we've left part of society behind. There's nothing wrong with acknowledging it and trying to do something about it. So we'll support the LGBT community. We'll support free, fair, safe voting. But when it comes to defending our people,

absolutely we're going to do it. So you're often asked, when are you going to retire? And your answer is often, in five years. Yeah. So is 2029 the year? No, I stopped saying that. So first of all, it's totally up to the board. We've got wonderful people.

We've always said, I'm one of the few people who has a president in place who could take over tomorrow. Not many people could say that. And if you spoke to the people who know the company, they would say they're four or five people. They would be very comfortable running the company. You know, they're being moved around at different jobs. They're very good. They're very happy. I'm very happy.

The board will decide. I think I would tell you when I can no longer give my best and my all, I shouldn't do it. I should move on at that point. But, you know, I still have the energy and the capability. And I still think I'm aging well in terms of you do gain wisdom as you get older. And hopefully you can provide value to the company and my country through this perch. Good. Well, Jamie Dimon, thank you very much indeed for this interview. Emma, it was a pleasure. Thank you.

That's all for today, Friday, April 26th. The Journal is a co-production of Spotify and The Wall Street Journal. Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard, with help this week from Sam Baer. Our theme music is by So Wiley. Additional music this week from Catherine Anderson, Peter Leonard, Billy Libby, Bobby Lord, Emma Munger, Nathan Singapak, Griffin Tanner, and Blue Dot Sessions. Fact-checking by Mary Mathis. Thanks for listening. See you Monday.