In his widely watched annual letter to investors, JPMorgan Chase CEO Jamie Dimon shared his belief that emerging artificial intelligence tools will have transformational impacts at the same level as other benchmark technology advancements like the printing press and steam engine. He further warned that ongoing international conflicts and political maneuvering make predicting the coming economic year sketchy at best and reiterated his belief that Wall Street is overconfident when it comes to a national economic “soft landing” following the last few years of inflationary pressures riding an overheated U.S. economy.
JPMorgan Chase is currently the largest U.S. bank by assets with around $3.4 trillion under management, a figure that also places it as the fifth largest bank in the world. Dimon, who’s held down the top executive spot since 2006, noted the ongoing resilience of the U.S. economy, with annual inflation continuing to ladder down after hitting a 40-year high of 9.1% in June 2022, robust consumer spending and job growth outpacing expectations.
A bumpy landing?
But he said the momentum has been backstopped with federal deficit spending and stimulus funding that continues to flow into the economy long after disbursements ended, even as other funding needs arise.
“The U.S. economy continues to be resilient, with consumers still spending, and the markets currently expect a soft landing,” Dimon wrote Monday. “It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus. There is also a growing need for increased spending as we continue transitioning to a greener economy, restructuring global supply chains, boosting military expenditure and battling rising health care costs. This may lead to stickier inflation and higher rates than markets expect.”
Dimon said while the markets appear to be pricing on expectations of a 70-80% probability of an economic soft landing, a target the Federal Reserve is hoping to hit as it ponders potential downward adjustments to its federal funds rates, he believes the chances of actually accomplishing that are “a lot lower.”
“Many key economic indicators today continue to be good and possibly improving, including inflation,” Dimon wrote. “But when looking ahead to tomorrow, conditions that will affect the future should be considered. For example, there seems to be a large number of persistent inflationary pressures, which may likely continue. All of the following factors appear to be inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of global trade, capital needs of the new green economy, and possibly higher energy costs in the future (even though there currently is an oversupply of gas and plentiful spare capacity in oil) due to a lack of needed investment in the energy infrastructure.”
The potential power of AI
While Dimon’s eye on the domestic and global economic environment bends toward wary, he’s enthusiastically embraced emerging artificial intelligence software and tools on multiple fronts.
Dimon said his firm has built its in-house AI and machine learning proficiency substantially over the past seven years with a workforce that now includes 2,000 AI/ML experts and data scientists. All that firepower has fueled JPMorgan Chase’s adoption of new tools across a wide variety of banking and investment operations, according to Dimon.
“We have been actively using predictive AI and ML for years — and now have over 400 use cases in production in areas such as marketing, fraud and risk — and they are increasingly driving real business value across our businesses and functions,” Dimon wrote. “We’re also exploring the potential that generative AI (GenAI) can unlock across a range of domains, most notably in software engineering, customer service and operations, as well as in general employee productivity.”
In an interview last August, JPMorgan Chase chief operating officer Daniel Pinto said the firm has plans to invest $1 billion or more per year in artificial intelligence. In his communique to investors, Dimon said the technology is poised to drive extraordinary changes and could even match the impacts of some of the biggest technological benchmarks in history.
“While we do not know the full effect or the precise rate at which AI will change our business — or how it will affect society at large — we are completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing and the Internet, among others,” Dimon wrote.
During a visit to Salt Lake City last month, Dimon told the Deseret News that JPMorgan Chase has expanded its operations in the state during his tenure as CEO and offered praise for Utah’s business climate.
“You have growing innovation hub and a positive, pro-business environment that’s dealing with its problems,” Dimon said. “Collaboration between business and government is key. That’s how you keep expanding.”