The largest bank in the world’s largest economy has just presented record quarterly results that show that US growth continues to gain momentum. But how long can it take?
According to J. P. Morgan Chase CEO Jamie Dimon, the expansion that began after the financial crisis of 2008 has no expiration date. The New York-based company reported on Friday a profit and sales that exceeded expectations on the strength of its core business, main street credit business.
“If you look at the American economy, the consumer is in good shape, balance sheets are in good shape, the people return to the workforce, the companies have a lot of capital,” said Dimon during a call with analysts.
“It could take years,” he added. “There is no law that says it must stop. We make lists and look at all the other things: geopolitical issues, lower levels of liquidity. There may be a confluence of events that somehow causes a recession, but it cannot be in 2019, 2020, 2021.”
Fears that a recession will be on the horizon last month, when bond markets gave signals that economic confidence will weaken as one looks outwards. A segment of the yield curve inverted, which means that short-term debt is more than longer-term bonds, a phenomenon that often occurs before recessions.
But this signal is not a perfect predictor, and Federal Reserve officials have recently left open the possibility that the improvement of economic conditions could justify an increase in interest rates.
If there is a short-term recession, the most likely cause would be a collapse of the trade negotiations between the US and China, Dimon said. But overall, the game of recession prediction Fool game, he said.
“Some clashes of events sometime in the future will cause a recession,” Dimon told reporters during a separate media call. “I don’t know what that is, nobody knows what it is, and no one will ever know what they are. If you knew what they were, you’d be incredibly rich.”