Jamie Dimon blasts central banks for ‘dead wrong’ predictions

JPMorgan Chase CEO Jamie Dimon lit into central banks Tuesday, saying they were “100 percent dead wrong” about where the economy was heading over the last year and a half and urging “humility about financial forecasting.”

Speaking at a financial forum in Saudi Arabia, Dimon was widely critical of U.S. economic policies and cautioned against the hubris of the financial sector.

“There’s a kind of omnipotent feeling that central banks and governments can manage through all this stuff — I’m cautious,” he said.

Dimon himself got hoodwinked by negative forecasts about the economy, which proliferated among commentators last year as the Federal Reserve started rapidly raising interest rates and trimming its balance sheet in response to high inflation.

Last spring, he warned of a “hurricane” that was about to descend upon the global economy as recession fears rattled stock markets, yield curves inverted in the bond market, and a false consensus about an economic downturn took hold among many commercial economists.

That hurricane has yet to materialize. Second quarter gross domestic product blew past expectations at 2.1 percent after rising 2.2 percent in the first quarter, and the economy added 336,000 jobs in September, numbers that are a far cry from a recession.

The Federal Reserve itself got confused about the outlook for the economy earlier this year, predicting a “mild recession” for some time this year after its rate-setting committee meeting in March before pulling that prediction over the summer.

Dimon on Tuesday questioned the power of the Federal Reserve and of monetary policy to direct the economy.

“I don’t think it makes a piece of difference whether rates go up 25 basis points or more — zero, none, nada,” he said.

Pandemic stimulus programs and large structural changes — effected by three major pieces of legislation passed during the first half of the Biden administration — in the U.S. economy have likely been working in the opposite direction to the Fed’s program of quantitative tightening.

Comprising the Chips and Science Act, the Bipartisan Infrastructure Law and the Inflation Reduction Act, the new legislation has already led to an investment boom in factory construction. 

Some economists have surmised that paycheck protection program (PPP) loans sent out during the pandemic may have also had a multiplier effect on demand in the labor market, further diminishing the effect of Federal Reserve rate hikes.

Dimon on Tuesday also took a shot at environmentally conscious investing, known as ESG, for failing to get behind a carbon tax.

“I’m in favor of this whole ESG effort. On the other hand, if you look at the way we’re going about it, it’s almost like governments want to whack-a-mole and force it – but no carbon taxes, no rational way to go about it,” he said.