Jamie Dimon says the US economy looks headed for a ‘fairly rapid recovery’ from the coronavirus pandemic
by Carmen Reinicke, Business Insider US
- Jamie Dimon said the US could see a fairly rapid recovery at a Deutsche Bank conference Tuesday, Bloomberg reported.
- “The government has been pretty responsive, large companies have the wherewithal, hopefully we’re keeping the small ones alive,” said Dimon, the CEO of JPMorgan.
- He added that the “increasingly strong actions” of the Federal Reserve have helped small businesses.
- Read more on Business Insider.
The US economy could see a swift recovery in the third quarter of the year according to JPMorgan CEO Jamie Dimon.
“The government has been pretty responsive, large companies have the wherewithal, hopefully we’re keeping the small ones alive,” Dimon said during the Deutsche Bank Global Financial Services Conference on Tuesday. “You could see a fairly rapid recovery.”
As many US states have begun to reopen parts of their economies from sweeping lockdowns to contain the disease, “you’re already seeing the positive effects of the opening-up taking place, at least for the economy,” Dimon said, according to Bloomberg.
The pandemic erased a record 20.5 million US jobs in April and pushed the unemployment rate to 14.7%, the highest since the Great Depression. Still, Dimon noted that while economists expect the unemployment rate to spike higher in the second quarter – JPMorgan’s own forecast is for a jump to 20% – many think it will fall in the third quarter and through the end of the year.
Dimon also said that the swift “increasingly strong actions” of the Federal Reserve have helped keep the economy on track, adding that the central bank’s move to lower interest rates to zero, establish new lending programs, and pump trillions into the economy “wasn’t the bazooka.”
“The Fed took out the whole military and applied it. Just announcing these programs reduced spreads in the market,” Dimon said, adding that the actions are going to save many small businesses and are helping people avoid stress.
Dimon also noted that even with high unemployment, the US consumer is looking relatively strong. He pointed out that about one-third of those who asked for forbearance on home loans have not used it.
“It’s a healthier consumer. You see that in underlying delinquencies. It’s completely different from a consumer standpoint” than during the financial crisis in 2008, he said.
Dimon also said that the bank will boost its credit reserves in the second quarter, “roughly equivalent” to what it added in the first quarter, according to Reuters. In the bank’s best case scenario, it might not need to build the reserves after this quarter, Dimon said.
Even though he expects a rebound, Dimon said that it’s still possible for the US to see a prolonged downturn.
“If it does go on for a year, it won’t be very good,” he said. “You can’t prop up the stock market forever.”