Dimon: Green Spending in ‘Inflation Reduction Act’ Will Crowd out Other Investment

On Wednesday’s broadcast of CNBC’s “Power Lunch,” JPMorgan Chase Chairman and CEO Jamie Dimon stated that there’s a “good chance” spending on the green economy in things like the Inflation Reduction Act will crowd out other investment.

CNBC Senior Banking Reporter Leslie Picker asked, “[Y]ou’ve said previously at investor day that everyone should be prepared for rates as high as 7%. And there’s a narrative out there that June’s softer-than-expected CPI print is indicative of kind of this mission accomplished, we’re all good, inflation’s under control. Do you agree with that narrative?”

Dimon responded, “No. I think people over look at short-term data. All that — if you actually dig into the data, you probably wouldn’t pay much credence to it. … And when I’m saying 7%, I’m not saying it’s going to happen. I’m saying, as a businessperson, there are reasons why it might happen, and you should be prepared for it. You never want to be in a position and say, I didn’t expect oil to go to 120 or [1]30 or interest rates to go up 500 basis points, and therefore, I’m bankrupt. We should all be prepared for those types of things. But there’s been a sea change in capital flows around the world. Governments have to sell more debt than ever before. All governments, including the United States. Now, some say less than — down deficits, they’re not down from pre-COVID. Debt levels are very high, they’re selling more debt. Interest rates have gone up. Central banks are selling, they were big buyers, now, they have to sell for QT. We’ve never had QT before. And then also this new economy of ours, the green economy, $4 trillion a year. IRA, CHIPS Act, militaries around the world, almost every country is beefing up its military a little bit. These things may be a sea change in what you’re seeing about capital demand. And I think there’s a good chance that you guys, in six months or nine months are going to be talking about crowding out.”

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