Economy

We’ve been ‘spending like drunken sailors,’ risking the economy: JPMorgan CEO

Published

1 year ago

September 12, 2023

JPMorgan’s Jamie Dimon says we’ve been ‘spending like drunken sailors,’ and that’s a big risk to the economy.

JPMorgan CEO Jamie Dimon has once again sounded caution over a resilient US economy, which has remained so despite the Federal Reserve’s relentless rate hike cycle.

“I just think people make a mistake to look at real-time numbers and not look at the future. And the future has quantitative tightening,” Dimon said at an industry conference on Monday. He was referring to policies that drain liquidity from the market.

“We’ve been spending money like drunken sailors around the world, this war in Ukraine is still going on. Those are really big buts. To say the consumer is strong today, meaning you got to have a booming environment for years is a huge mistake,” Dimon said.

American spending has been bolstered by ballooning asset prices, rising wages, and COVID-era savings — but this stash may be falling and “normalizing,” he added.

Indeed, researchers at the Federal Reserve Bank of San Francisco wrote in an August 16 post they expect consumer savings from the pandemic era to run out in the current third quarter.

Dimon’s warning about the economy echoes similar views by prominent observers, including top economist David Rosenberg, who said in early August that the Fed’s aggressive rate hikes and the resumption of student-loan payments next month could contribute to a consumer-led recession.

A Bloomberg survey of investors conducted last week also showed that more than half of the respondents said they think personal consumption could shrink in early 2024.

Since consumer spending accounts for about 70% of the US economy, any changes to the measure are a big deal.

After all, the resilience of the US consumer has kept the economy going even amid the Federal Reserve’s relentless rate hike cycle since March last year. The US real gross domestic product, or real GDP, grew at an annualized rate of 2.4% in the second quarter of 2023, according to the Bureau of Economic Analysis — a strong beat over Wall Street’s 1.8% growth forecast.

JPMorgan did not immediately respond to a request for comment from Insider sent outside regular business hours.

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

17 hours ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

2 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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Economy

Statistics Canada says manufacturing sales fell 1.3% to $69.4B in August

Published

2 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.

The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.

The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.

Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.

Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.

Overall manufacturing sales in constant dollars fell 0.8 per cent in August.

This report by The Canadian Press was first published Oct. 16, 2024.

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