NEW YORK: A US leading banker on Friday highlighted vulnerabilities and downside risks facing the US economy after JPMorgan Chase & Company reported less profits in the fourth quarter of 2023, reported Xinhua.
“It is important to note that the economy is being fuelled by large amounts of government deficit spending and past stimulus,“ said Jamie Dimon, chairman and chief executive officer with JPMorgan Chase & Company.
There is also an ongoing need for increased spending due to the green economy, the restructuring of global supply chains, higher military spending, and rising healthcare costs, which may lead inflation to be stickier and rates to be higher than markets expect, said Dimon in a financial statement issued on Friday.
The banker also noted a number of downside risks to watch.
“Quantitative tightening is draining over US$900 billion of liquidity from the system annually, and we have never seen a full cycle of tightening,“ said Dimon.
Dimon said the ongoing wars in Ukraine and the Middle East have the potential to disrupt energy and food markets, migration, and military and economic relationships, in addition to their dreadful human cost.
“These significant and somewhat unprecedented forces cause us to remain cautious,“ said Dimon.
JPMorgan earned US$9.3 billion of net income in the last quarter of 2023, down 29 per cent quarter on quarter and 15 per cent less from the same period of the previous year.
In particular, JPMorgan reported US$2.9 billion of special assessment from the Federal Deposit Insurance Corporation, US$2.8 billion of credit costs, and US$743 million of net investment securities losses, primarily driven by sales of US Treasuries and mortgage-backed securities.
Still, Dimon noted that the US economy continues to be resilient, with consumers still spending, and markets currently expect a soft landing.-Bernama
