JPMorgan Chase CEO Jamie Dimon is bullish on the economy, and he thinks the hot expansion will lead the Federal Reserve to raise interest rates at least five times this year.
“We’re going to have the best growth we’ve ever had this year, I think since maybe sometime after the Great Depression,” Dimon told CNBC Monday. “Next year will be pretty good too.”
In December, Federal Reserve officials offered a median forecast of 4% economic growth for this year and 2.2% for next year.
Dimon’s bullishness stems from the strength of consumer finances. “The consumer balance sheet has never been in better shape,” he said
“They’re spending 25% more today than pre-Covid. Their debt-service ratio is better than it’s been since we’ve been keeping records for 50 years.”
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Americans have established $2.7 trillion in excess savings since the start of the Covid pandemic in early 2020, according to Bloomberg Economics. That’s about 200% above the normal total.
Dimon said the economy can withstand interest rate increases, and he foresees more hikes than some others. The median forecast of Fed officials calls for three this year, while Goldman Sachs Chief Economist Jan Hatzius is looking for four.
But, “it’s possible that inflation is worse than they think and they raise rates more than people think,” Dimon said. “I personally would be surprised if it’s just four increases.”
Consumer prices soared 6.8% in the 12 months through November, the highest increase in 39 years.
Dimon said the big rise in rates will cause volatility in the stock market.
“If we’re lucky, the Fed can slow things down and we’ll have a soft landing,” he said.
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