JPMorgan Chase CEO Jamie Dimon told a financial conference in New York on Monday that people who assume that the U.S. economy will continue to boom for years on the back of consumer strength are making “a huge mistake.”
Mr. Dimon made the remarks at the Barclays Global Financial Services Conference on Sept. 11, at which he warned of a number of risks to the economy, including the Ukraine war, monetary tightening by the Federal Reserve, and increasing reliance on government spending.
“To say the consumer is strong today, meaning you are going to have a booming environment for years, is a huge mistake,” he said.
The booming economy narrative rose to prominence in recent months, driven by strong retail sales and wage growth, while recession fears have eased. But there are signs that the recent rise in consumer sentiment has been short-lived and that the economy is facing some headwinds.
Consumer Strength Weakening?
Consumer spending, which represents roughly 70 percent of U.S. gross domestic product, posted solid growth in July, the latest month of available data. However, economists widely expect the past year of aggressive Fed interest rate hikes to weigh more heavily on domestic demand.
The latest data on retail sales showed that Americans spent more than expected in July, splurging on hobbies, sporting goods, and clothing, prompting economists at Goldman Sachs to raise their third-quarter gross domestic product estimate by seven-tenths of a percentage point to a 2.2 percent annualized rate.
However, there are signs that the boom may not last as the latest consumer tracker for August from Deloitte says that financial well-being sentiment has stagnated, with the percentage of consumers worried about savings and postponing big purchases on the rise, while spending intentions “remain on a long-term downtrend.”
A separate barometer of consumer confidence from the Conference Board found that, after a sharp uptick in July, its gauge retreated to a reading “a hair above 80—the level that historically signals a recession within the next year.”
While financial markets have, over the summer, largely dismissed recession fears, fresh data suggests that the country may be facing a “stagnation” point.
“A near-stalling of business activity in August raises doubts over the strength of U.S. economic growth in the third quarter,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a report that showed new orders tumbling, input cost inflation rising, and the pace of job creation slowing.
Mr. Dimon’s remarks at Monday’s conference tapped into this sentiment, with the JPMorgan chief saying that the health of U.S. consumers and businesses was still “pretty good,” although he warned against being overconfident.
Key concerns that he mentioned were the twin factors of central bank efforts to roll back easy money policies—which have pushed inflation to multi-decade highs—and governments “spending like drunken sailors.”
“I think there’s a false sense of security that those two things will end up being OK. I don’t know,” he said.
Higher Capital Requirements
At the conference, Mr. Dimon also took aim at the higher capital requirements U.S. regulators have proposed for banks, warning that such measures could starve the economy of credit and amount to another hurdle to growth.
“I wouldn’t be a big buyer of a bank,” he said, drawing laughter from the audience, while calling the new proposal “hugely disappointing.”
Mr. Dimon, who heads America’s biggest lender, questioned what regulators were trying to accomplish by proposing the new rules, which would require bigger U.S. banks, with total assets of $100 billion or more, to set aside billions of dollars to bolster their ability to absorb losses when times get tough.
“All I want is fairness, transparency, openness,” Mr. Dimon said with regards to the regulatory proposal, which would require banks with total assets of $100 billion or more to maintain an additional 2 percentage points in capital above current levels.
The regulatory proposal has been roundly criticised by the banking industry, with Bank Policy Institute (BPI) President and CEO Greg Baer warning of “higher costs to consumers and greater instability for markets,” in a statement obtained by The Epoch Times.
Mr. Dimon said that the new regulatory proposal would require JPMorgan to hold 30 percent more in capital than a European lender, which he said was an unfair burden on U.S. banks.
In contrast to Mr. Dimon’s take on tougher bank capital rules, some U.S. regulators have said the proposal doesn’t go far enough.
Minneapolis Federal Reserve President Neel Kashkari recently said he expects more government regulation of the banking sector in light of several high-profile bank failures.
Mr. Kashkari also said that he’d like to see the proposed capital requirement rules apply to smaller institutions with less than $100 billion in total assets, though he didn’t specify what threshold he had in mind.
At Monday’s conference, Mr. Dimon also said he believes that the Chinese market is no longer as attractive to foreign investors as it once was.
“In terms of our own business, the risk-reward [from China], which was very good, has now become okay. The risk is bad,” he said, adding that JPMorgan has become more cautious about managing its risk.
Caution has also entered the homebuyer market in the United States, with mortgage applications dropping last week to their lowest point since 1996.
Reuters contributed to this report. Article cross-posted from our premium news partners at The Epoch Times.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
