In his annual letter to shareholders, JPMorgan Chase’s chief Jamie Dimon asserts that a combination of excess savings, deficit spending, vaccinations, infrastructure projects, and a festive mood for the end of the pandemic contribute to creating a boom that may extend into 2023.
Dimon also alerts that there is a chance of an inflation trend, forcing the Fed to raise interest rates aggressively, “Rapidly raising rates to offset an overheating economy is a typical cause of a recession,” but hopes for “the Goldilocks scenario” of fast growth, gently increasing inflation and a measured rise in interest rates.
Dimon also merits the bold action by the Fed and the U.S. government, which effectively reversed financial panic from the beginning of the pandemic and complained about the growth of Fintech without regulation or controls, at the expense of the traditional banking institutions who have lost their premier role in the financial system of the economy.
On another matter, Dimon warns that “the Chinese see an America that is losing ground in technology, infrastructure, and education — a nation torn and crippled by politics, as well as racial and income inequality — and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals,” and concludes: “Unfortunately, recently, there is a lot of truth to this.”
It is worth reading material as it covers many other issues that are as relevant as they are enlightening.