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JPMorgan CEO Jamie Dimon says big risks loom for the US economy

JPMorgan Chase & Co. Chief Government Jamie Dimon mentioned the U.S. financial system is dealing with unprecedented dangers which have him getting ready for dramatic upheavals.

The pinnacle of the nation’s largest financial institution provided a largely upbeat view of the financial system’s well being in his annual letter to shareholders Monday. Shoppers and companies are flush with money, wages are rising and the financial system is rising quickly after its pandemic slowdown. Whereas shopper confidence has declined, Mr. Dimon says the extra vital gauge is booming spending.

But Mr. Dimon warned that the struggle in Ukraine might collide with rising inflation to sluggish the pandemic restoration and alter world alliances for many years to come back.

“They current utterly completely different circumstances than what we’ve skilled prior to now—and their confluence could dramatically enhance the dangers forward,” Mr. Dimon wrote. “Whereas it’s potential, and hopeful, that each one of those occasions may have peaceable resolutions, we should always put together for the potential unfavourable outcomes.”

A lot has modified since Mr. Dimon’s final shareholder letter. Final April, because the world emerged from the pandemic, he noticed an opportunity for an financial “Goldilocks second”—quick, sustained development alongside inflation and rates of interest that drift slowly upward. As an alternative, development was accompanied by inflation that effectively outpaced expectations.

“In hindsight, the drugs…was most likely an excessive amount of and lasted too lengthy,” Mr. Dimon wrote in Monday’s letter, referring to pandemic-era stimulus measures that saved shoppers afloat and borrowing prices low.

Mr. Dimon warned that the Federal Reserve might transfer rates of interest “considerably greater than the markets anticipate.” The Fed started elevating charges final month and signaled a number of extra will increase this 12 months, together with a possible half proportion level as a substitute of the standard quarter level on the subsequent assembly.

“This course of will trigger a lot of consternation and really risky markets,” Mr. Dimon added.

Russia’s struggle in opposition to Ukraine and Western sanctions meant to cease it’ll “at a minimal” sluggish the worldwide financial system, Mr. Dimon mentioned. Oil, commodity and agriculture markets are already reeling, he mentioned. The prospect of extra sanctions, which he helps, might “dramatically, and unpredictably, enhance their impact.”

“Together with the unpredictability of struggle itself and the uncertainty surrounding world commodity provide chains, this makes for a doubtlessly explosive state of affairs,” Mr. Dimon mentioned.

JPMorgan, he disclosed, might lose about $1 billion over time on its enterprise in Russia.

Mr. Dimon renewed his name for a brand new Marshall Plan, referring to the U.S. initiative to assist Western Europe rebuild after World Struggle II. Power investments, he mentioned, are particularly wanted to wean the world off Russian oil and fuel. He particularly referred to as for the U.S. to situation permits for oil and fuel initiatives and elevated transport of liquefied pure fuel to Europe.

However Mr. Dimon mentioned that guaranteeing present vitality wants are met doesn’t have to come back on the expense of investments in inexperienced vitality and broader efforts to scale back carbon emissions.

“We have to safe correct vitality provides instantly for the following few years, which could be performed whereas lowering CO2 emissions,” Mr. Dimon wrote.

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