2018 Housing Summit

Jamie Dimon Optimistic for US, Global Economy

Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co., spoke candidly to business leaders about the US economic recovery, rising interest rates, technology and innovation, and what they could mean for business going forward.

On the Economic Recovery

America today is stronger than ever before. We have the best hand ever dealt: We have a prosperous economy, deep financial markets, free enterprise and freedom of speech, the best universities and military, and the most innovative companies and people in the world.

However, there are challenges. We’ve seen 2 percent growth—or 20 percent over the last nine years. A normal growth during an economic recovery of this length would be about 40 percent. Our uncompetitive tax system has driven a tremendous amount of capital overseas over the last 20 years. Limited access to credit, bureaucracy and high startup costs are crippling small business formation. There’s also an education crisis—half of inner-city students don’t graduate, and college education is one of our biggest exports, making it difficult to fill available jobs. Despite all of this, the US economy has been growing at a 3 percent annualized rate this year and is expected to sustain that growth for the remainder of the year.


On Rising Interest Rates

Interest rates are going to increase, at least to 4 percent. Rates are normalizing as a result of economic growth, which is a positive thing. Housing is in short supply, and household formation is going up. If there’s rising inflation, the Federal Reserve may raise rates more quickly than expected, which could lead to a recession.

Businesses should be prepared for a volatile rate environment and what may follow. All businesses have cycles, and people who can manage a down cycle are usually the victors. Companies that don’t react quickly, fail.


On China and Trade

There are legitimate concerns with our relationship with China: technology transfer issues, investment restrictions and an escalating trade war. The market is already responding to threats of new tariffs, and the impact on businesses could be detrimental. We could see a ripple effect on job creation, cost of goods and consumer confidence, among other things.


On Healthcare

The debt-to-GDP ratio today is 76 percent of GDP. In the coming years, this will grow exponentially—and much of it can be attributed to Medicare and Medicaid expenses. Very soon, the government won’t be able to afford it. While the government contributes a lot to support healthcare, companies pay a lot, too. There are many factors contributing to these rising costs—chronic care, obesity, smoking, end-of-life care, overall health and lifestyle—and any long-term plan needs to address the different variables that go into supporting healthcare for Americans.


On Technology and Innovation

Technology is the greatest thing to happen to mankind. We’ve made unbelievable progress—and it’s all driven by technology. Technology causes disruption, which can be unsettling for businesses. But it can also help move the needle forward for problems that haven’t been solved yet, like education and healthcare. For businesses, technology will reduce costs and help you pass on the savings to your customers. Regardless of your industry, disruptions are coming—and you should plan for them.


The material contained herein is intended as a general market and economic commentary, in no way constitutes JPMorgan Chase research and should not be treated as such. In no event shall JPMorgan Chase nor any of its directors, officers, employees or agents be liable for any use of, for any decision made or action taken in reliance upon, or for any inaccuracies or errors in or omissions from, the information herein. Further, the information and any views contained herein may differ from that contained in JPMorgan Chase research reports.

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Used with permission. The opinions expressed herein are those of the author and do not necessarily reflect that of JPMorgan Chase. JPMorgan Chase believes the information contained in this material to be from reliable sources but make no representation or warranty as to its accuracy or completeness.

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