JPMorgan Chase CEO Jamie Dimon warned on Wednesday that the US needs to pay down its fiscal deficit sooner rather than later before the issue turns into a “far more uncomfortable” crisis down the road.
“America has spent a lot of money,” Dimon told Sky News on Wednesday. The banking boss blamed soaring levels of inflation partly on government spending.
When asked if the US will face consequences within the next two years if it didn’t bring its federal spending under control, Dimon told Sky News: “I don’t think it’s a big comeuppance and I don’t think it’s the next couple of years, but I think it is why we have higher inflation.”
Dimon said that massive government spending has driven growth, but there’s a downside.
“During Covid and after Covid, our deficit is at 6% now. That’s a lot, but obviously that drives growth.”
Dimon said that while “any country can borrow money and drive some growth,” it may not always lead to “good growth.”
“So, I think America should be quite aware that we have got to focus on our fiscal deficit issues a little bit more, and that is important for the world,” Dimon said.
Dimon’s comments echo those of Goldman Sachs CEO David Solomon, who said earlier this week that US policymakers need to put greater “focus” on the nation’s ballooning debt and deficit — warning that the federal government’s “ability to spend without constraint is not unlimited.”
A deficit is the result of the federal government spending more money than it brings in in revenue.
In fiscal year 2024 which began last October, the Biden administration has spent $855.1 billion more than it has collected, according to the Treasury Department.
During the same period starting in October 2022 and stretching until April of last year, the national deficit was $925 billion — or $70 billion more than this fiscal year.
For fiscal 2023, the deficit came in at $1.7 trillion — up from $1.4 trillion in fiscal 2022. The last time the federal government budget ran a surplus was in 2001.
The national debt, which recently surpassed $34 trillion, is on course to exceed $45.7 trillion within a decade, according to projections by the Congressional Budget Office.
“I think if you want to do a great job in your country, and you have a 6% deficit and 100% debt to GDP, this can go [on] for a while, but the sooner we focus on it, the better,” Dimon said.
He expressed hope that the government “really focuses” on reducing the deficit while maintaining strong economic growth.
“At one point it will cause a problem and why should you wait?” Dimon said.
“The problem will be caused by the market and then you will be forced to deal with it and probably in a far more uncomfortable way than if you dealt with it to start.”
Dimon, who has recently made comments urging Democrats to be “more respectful” of supporters of former President Donald Trump, denied in the interview to Sky News that he is angling to be treasury secretary in a second Trump administration should the Republican win election this fall.
“Absolutely not,” Dimon said, adding: “I made those comments to make a point that we should listen to each other and talk to each other, whether you agree with someone or not.”
Dimon, who has made critical comments about Trump in the past, conceded recently that the former president was “kind of right” on a range of issues such as immigration, NATO and China.
“I think people should be very clear about what policies work and what policies don’t work,” Dimon said.
“Whoever wins the presidency, I hope they have policies that work for both America and the free and democratic world.”
Dimon also said the US was doing the right thing by fully engaging with China, who should be seen as a fierce competitor but “not an enemy” of the West.
The Post has sought comment from the White House.
