Jamie Dimon Is Still a Skeptic on the Economy

Over the years, JPMorgan Chase CEO Jamie Dimon has often been skeptical of the economy, even when most other voices said otherwise. From March into August this year he’s stood by his estimate that there was a 65% chance of U.S. recession.

He’s still insistent on the need for caution and, as he said last year, the reason is geopolitics.

“Geopolitics is getting worse, they are not getting better,” Dimon said in an interview with India’s CNBC-TV18, as CNBC reported. “There is chance for accidents in energy supply. God knows if other countries get involved. You have a lot of war taking place right now.” He called geopolitical instability his “biggest caution.”

He called himself a “long-term optimist” but a “skeptical of other people that say everything [is] going to be great.”

His point about energy, with obvious references to the war between Russia and Ukraine as well as rising conflicts in the Middle East, is clear. As the pandemic showed, supply chain disruptions can turn economies upside down, and energy prices were at times one of the biggest factors in climbing U.S. inflation.

Goldman Sachs chief financial officer Denis Coleman took a different view, as he told CNBC recently. He thinks the Federal Reserve’s 50-basis-point interest rate cut put the country on the path to an economic soft landing. The size of the rate cut was last seen during the height of the Covid-19 pandemic. Before that, it occurred after the 2008 global financial crisis.

“I think this first 50 basis point cut is a clear signal in terms of the new direction,” Coleman said. “And hopefully that will unlock incremental amounts of confidence and should obviously reduce cost of capital — and perhaps for some more strategic activity heading into the end of this year.”

Coleman further said, “It’s always a very tricky job to manage economies through transition. But you know, inflation levels are coming down, unemployment is manageable, they’re starting to put through the rate cuts and sort of maintain a soft-landing trajectory.”

Without taking sides, there is always a case for risk management and there are signals that the economy might not be all that it seems.

Consumer confidence slipped in September, according to the Conference Board. The drop — from 105.6 in August to 98.7 — was below expectations. The 2-year Treasury yield fell some in reaction.

Federal Reserve Governor Michelle Bowman was the sole dissenter on the size of the rate cut, preferring the 25-basis-point level.

“As my statement notes, I preferred a smaller initial cut in the policy rate while the U.S. economy remains strong and inflation remains a concern, despite recent progress,” Bowman wrote. “Although personal consumption has remained resilient, consumers appear to be pulling back on discretionary items and expenses, as evidenced in part by a decline in restaurant spending since late last year.” Low- and moderate-income consumers lack extra savings from pandemic support.

Perhaps it’s best to remember, as Dimon does, that certainty is often a luxury when trying to discern the future.