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Government Shutdown Could Slash US Economic Growth to Zero: JPMorgan CEO Jamie Dimon

Last Updated March 4, 2021 2:51 PM
Samantha Chang
Last Updated March 4, 2021 2:51 PM

Jamie Dimon, the CEO of JPMorgan Chase, warns that the partial US government shutdown could cut the United States’ economic growth to zero if it continues through March 31.

“Someone estimated that if it goes on for the whole quarter, it can reduce growth to zero,” Dimon told reporters . He did not cite the source for his claim.

The billionaire banker made the remark while discussing JPMorgan’s disappointing fourth-quarter earnings.

Dimon: Politicians Must Resolve Shutdown

Dimon says the government shutdown — which started December 22 — is “more of a political issue” than anything else. So the politicians in Washington, DC must get their acts together and resolve the issue soon.

We need good government policy to help the economy. And the shutdown is not going to help the economy.

JPMorgan Misses 4Q Earnings Expectations

Meanwhile, JPMorgan missed analysts’ earnings estimates for the first time in four years.

For the fourth quarter ended Dec. 31, JPMorgan reported net income of $7 billion, or $1.98 a share, on revenue of $26.8 billion. That’s below Wall Street expectations of $2.20 a share.

In its 4Q earnings release , Jamie Dimon expressed confidence in the economy. He noted that the “underlying statistics for the economy globally are not bad.”

As CCN.com reported, Dimon is bullish about both the US and global economy. Despite the stock market slump in late-December following the Fed’s fourth interest rate hike in 2018, Dimon says there’s no recession ahead.

Dimon said the global economy is experiencing a slowdown, but a recession does not loom on the horizon.

It looks to me like a slowdown [not a recession]. It looks like there will be growth.

Investment Bankers: No Recession Ahead

Jamie Dimon echoed the bullish sentiments of other prominent investment bankers, including Krishna Memani of OppenheimerFunds and Mohamed El-Erian of Allianz SE.

Memani says there won’t be a US recession for at least another five years. “There’s no recession imminent — I think five more years is what we are talking about,” Memani says.

Memani says the Federal Reserve’s suggestion that it won’t repeatedly hike interest rates like it did in 2018 has eased anxiety on Wall Street.

Similarly, Mohamed El-Erian — the chief economist at Allianz — said the US economy would continue to grow at a healthy rate of 2.5% to 3%, while wages will increase 3% or more.

However, El-Erian expects the stock market to remain volatile — but that does not mean there’s a recession coming.

“Don’t be surprised if you see these 1,000-point swings in the Dow Jones,” El-Erian says. “That is our new reality for a while.”

Featured Image from World Economic Forum/Wikimedia Commons