JPMorgan Chase President and CEO Jamie Dimon predicted Wednesday that a post-pandemic U.S. economic expansion may stretch “well into 2023” with the proper federal investments.
“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more [quantitative easing], a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” Dimon wrote in his annual letter to the bank’s shareholders.
Dimon added that the length and power of the expansion will depend on “the quality, effectiveness and sustainability of the infrastructure and other government investments” President Biden and congressional Democrats are attempting to pass.
“I hope there is extraordinary discipline on how all of this money is spent,” he wrote. “Spent wisely, it will create more economic opportunity for everyone.”
Analysts across the public and private sectors have upgraded their projections for U.S. economic growth in 2021 over the past few months as the country accelerates the pace of COVID-19 vaccinations and feels the impact of trillions of dollars in federal aid.
Biden on March 11 signed a $1.9 trillion COVID-19 relief bill that many economists say will help speed up the recovery from the pandemic-driven recession and limit its long-term damage. The president has also proposed a $2.5 trillion infrastructure plan that would be funded by increases in corporate taxes.
“Virtually everyone agrees that we have done a woefully inadequate job investing in our infrastructure — from highways, ports and water systems to airport modernization and other projects,” Dimon wrote on Wednesday, arguing that poor U.S. infrastructure detracts from American economic output.
“Such a plan would also create many new jobs with competitive salaries and spur workforce innovation. It could intentionally provide employment opportunities for disadvantaged and young workers, including those with a criminal background.”
Dimon, however, argued that spending trillions on infrastructure projects with little economic benefit and failing to pare back costly regulations would undercut Biden’s plan.
“Building ineffective ‘bridges to nowhere’ while temporarily creating jobs is actually a huge value destructor. This kind of waste would ultimately undermine Americans’ faith in our system,” he wrote.
While many major U.S. companies and their Washington advocates support a massive infrastructure investment, they have fiercely opposed Biden’s plan to pay for it with a hike to the corporate income tax rate, the elimination of certain credits and new minimum taxes for large companies.
Dimon argued that increasing the U.S. corporate income tax rate would make American companies less competitive abroad and hinder economic growth, a view shared widely within the business community and among Republican lawmakers. He wrote that lawmakers should instead target individual tax rates and deductions that benefit high earners and the wealthy.
“The retention and reinvestment by businesses of capital in the United States is ultimately the primary driver of productivity and growth. Even if that capital is distributed in dividends or stock buybacks, it is simply being put to a higher and better use,” he wrote.
“Unfortunately, taxes that minimize damage to growth would involve taxing high incomes. The wealthy are less likely to complain about taxes if the money is actually used to help the less fortunate or help build a better country,” he continued.
Biden, Democratic lawmakers and left-leaning economists counter that powerful U.S. companies — many of which have done well during the pandemic — can afford to bolster the broader economy.
“It’s a once-in-a-generation investment in our economic future — a chance to win the future, paid for by asking big corporations, many of which do not pay any taxes at all, just to begin to pay their fair share,” Biden said Friday about his infrastructure plan.
“Asking corporate America just to pay their fair share will not slow the economy at all. It will make the economy function better and will create more energy.”