"Growth to Continue at Least Until Q2 and Q3 This Year... What Happens After Is Uncertain"
[Asia Economy Reporter Byunghee Park] "I am merely pointing out that there are dark clouds gathering far on the horizon. The dark clouds may disappear, or they may not."
According to CNBC and others on the 13th (local time), Jamie Dimon, chairman of JP Morgan Chase, the largest bank in the United States, described the current U.S. economic situation this way during the earnings conference call. Dimon said that it is impossible to predict whether the distant dark clouds will turn into a storm or just a breeze, indicating that the long-term outlook is unpredictable. However, he said that dark clouds are unlikely to gather until the second or third quarter of this year, expressing cautious optimism in the short term.
Dimon cited the solid consumer base, which is the foundation of the U.S. economy, as the reason for his short-term optimism. He said, "At least until the second and third quarters of this year, economic growth will continue," adding, "Credit card spending growth is in double digits, while delinquency rates are low, and household and consumer debt ratios are also healthy."
However, Dimon said that the outlook beyond that is unpredictable. He specifically pointed to inflation and the war in Ukraine as risk factors. He said, "These risks could deliver a strong shock, and no one knows what the outcome will be." He added, "Because the outcome is unknown, I am not predicting a recession. But if asked whether a recession is possible, I would certainly say yes."
Dimon emphasized the important role of the central bank, the Federal Reserve (Fed), especially regarding inflation risks. He pointed out that the Fed could cause a recession in the U.S. economy by making mistakes in its policy decisions.
JP Morgan's net profit for the first quarter of this year was $8.28 billion, down 42% from $14.3 billion in the first quarter of last year. Dimon said the bank increased its loan loss provisions by $920 million in preparation for potential future losses. This is the exact opposite of last year's first quarter, when loan loss provisions were reduced by $5.2 billion.
Dimon said, "The war's outcome is unpredictable," adding, "We have already seen this in the unstable crude oil market." He said, "We want all risks to disappear, the U.S. economy to achieve a soft landing, and the war to be resolved, but we cannot bet everything on these hopes."
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