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• Dimon said his confidence is increasing from the robust balance sheet of the American consumer
• He warned stock market investors might see financial market volatility, which will increase as the Fed raises rates
On Monday, JPMorgan Chase & Co CEO and Chairman Jamie Dimon said the U.S. is headed for the best economic growth in decades, which will come even as the Fed raises rates possibly more than investors expect.
“We’re going to have the best growth we’ve ever had this year," Dimon stated. "I think since maybe sometime after the Great Depression,” Dimon told CNBC during the 40th Annual J.P. Morgan Healthcare Conference. “Next year will be pretty good too.”
Dimon said the balance sheet of the American consumer has never been in better shape; they’re spending 25% more today than in the pre-COVID-19 era.
“Their debt-service ratio is better than it’s been since we’ve been keeping records for 50 years,” he said, suggesting a solid balance sheet.
JPMorgan is the biggest U.S. bank by assets and has relationships with half of U.S. households.
Rising rates & market volatility
Citing signs of the 30-year high inflation, Dimon said he thinks the Federal Reserve might have to raise short-term interest rates more than four times this year.
“It’s possible that inflation is worse than they think, and they raise rates more than people think,” Dimon told CNBC.
Banks tend to thrive when there’s a hike in interest rate because their lending margins expand as rates climb.
Although Dimon said while the underlying economy looks strong, he warned that stock market investors might see financial market volatility, which he thinks will increase as the Fed raises rates.
“The market is different,” Dimon said. “We’re kind of expecting that the market will have a lot of volatility this year as rates go up and people kind of redo projections.”
“If we’re lucky, the Fed can slow things down, and we’ll have what they call a `soft landing’,” Dimon added.
Picture Credit: Fortune