Some of the largest banks in the country— JPMorgan Chase, Wells Fargo, and Citigroup—kicked off the official start to earnings season on Friday with relatively upbeat results and comments from their top managements. All three banks beat earnings expectations for Q2. BlackRock did so as well.
In June 2022, JPMorgan Chase CEO Jamie Dimon warned that the economy could be in a recession by about now. Now he sounds more optimistic. American consumers are still driving the US economy, which “continues to be resilient,” Dimon statedon Friday. “Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly,” he said. However, he once again noted that consumers’ excess savings are slowly being drained. While job growth remains strong, he said there are still “salient risks in the immediate view,” including stubborn inflation, the risk of more rate hikes from the Federal Reserve, and geopolitical tensions. “While we cannot predict with any certainty how these factors will play out, we are currently managing the firm to reliably meet the needs of our customers and clients in all environments,” he said.
Asked whether moderating inflation has made him more optimistic that a recession could be avoided, Dimon said, “I don’t know if it’s going to lead to a soft landing, a mild recession or a hard recession.” He cited “tailwinds” in the economy that “are receding over time,” including the strength of consumer spending amid fiscal and monetary stimulus. Headwinds he sees include inflation, high US government debt, high interest rates, the Fed’s efforts to shrink its balance sheet, and the war in Ukraine. He noted that the war has been going on for 500 days and could still “get worse.”
Last June, Dimon contributed to investors’ fears of a recession and a prolonged bear market in stocks by saying he was certain that a hurricane was coming, though how bad a hurricane he didn’t know: “That hurricane is right out there down the road coming our way.” But nobody knows if it’s “a minor one or Superstorm Sandy.” Now, he seems less certain that a storm is coming.