James Dimon, the Chief Executive of JPMorgan mentioned last Tuesday that the largest bank in the country might just not be prepared enough to handle a double-dip recession in the economy. In a call on Tuesday, the CEO spoke about the financial institutions results for the third-quarter and discussed how JPMorgan Chase & Co. might just be over reserved by around $10 billion in order to cover up bad loans. And this would be an extreme possibility if the economy decides to keep recovering at the current rate. But if a slump occurred yet again- the bank might need $20 billion just for the reserves,
This forecast for the US economy might seem a bit exaggerated, considering the recovery rate of the economy- but if we look at the unemployment rate- it is still going to be above 7% even in the next year. The job report from the Labor Department in September did highlight how the US created close to 661,000 new jobs for this month- as the rate of unemployment fell to around 8%. Remarkably, this was the lowest that it had gone to this pandemic. But there was no gain in hiring- for the economy had almost decelerated- something JPMorgan has been talking about.
The CEO of JPMorgan did express his concerns about how a second slump might come about if both the Trump administration as well as the Congress didn’t make any leaps towards progress. Especially if the second stimulus check never saw the light of day for small businesses and out-of-work Americans.