JPMorgan CEO Jamie Dimon says the US economic boom could 'easily run into 2023'

• JPMorgan CEO Jamie Dimon said in his annual letter to shareholders that the US economic boom "could easily run into 2023."
• Dimon cited excess savings, new stimulus savings, deficit spending, and vaccine progress, among other economic drivers.
• He is especially bullish on the combination of fiscal and monetary stimulus being deployed in the US.

JPMorgan CEO Jamie Dimon said in his latest annual letter to shareholders that the US economic boom could "easily run into 2023."

"I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the US economy will likely boom," Dimon said.

Dimon argued that the US economy entered the COVID-19 recession in stronger shape than before the Great Recession, and that banks were part of the solution, rather than the cause, this time around. He also highlighted the impact of the US's unprecedented monetary and fiscal stimulus.

"The QE and deficit-spending response to the COVID-19 pandemic is of a completely different magnitude and without some of the offsetting drags that trailed the Great Recession," he said.

Dimon added: "Much of the stimulus may very well hit when the economy is doing quite well."

The chief executive's comments follow a slew of outlook upgrades from major banks. Bank of America, Morgan Stanley, and UBS, among others, lifted their forecasts for 2021 GDP growth last month, pegging their bullishness to fresh stimulus support and the accelerating rate of vaccination. Most firms now see the US reaching pre-pandemic output levels by the end of the second quarter.

Economists at powerful institutions are also boosting their expectations for economic recovery. The Federal Reserve raised its 2021 growth forecast to 6.2% from 4.5% during its March policy meeting. More recently, economists at the International Monetary Fund improved their projections for global growth and the US expansion in hopes that widespread vaccination could fuel a swift reopening.

Economic data is already signaling the increasingly optimistic forecasts are correct. The US added 916,000 nonfarm payrolls in March, handily beating the median estimate of a 660,000-payroll increase. Gains were strongest in sectors hit hardest by the pandemic but were still broad-based as reopening and stimulus lifted activity throughout the economy. A popular gauge of service-industry expansion surged to a record high as well, revealing a sharp turnaround from winter lockdowns.

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From a market standpoint, Dimon acknowledged that stock valuations are high by nearly ever conceivable measure. However, he argued that the current pace of the economic recovery could make those lofty prices justifiable, especially if investors deploy excess liquidity at least partially afforded by stimulus checks.

Dimon also acknowledged in the letter that the role of banks in the financial system has been diminished amid mounting competition from large technology companies, as well as the burgeoning fintech space.

More broadly, Dimon said that challenges that the US faced in the last year - including not just the pandemic, but also assorted social unrest and the 2020 presidential election - could hamper the nation's global power position if left unaddressed.

Dimon also referenced political and social turmoil as impactful on the US economy, including the pandemic, the murder of George Floyd, the 2020 presidential election and the US's competition for the role as the global hegemon with China.

These are major challenges to the US's future global power position and the outcome may be different to previous challenging times, Dimon cautioned. The events of the past year "merely expose enormous failures that have existed for decades and have been deeply damaging to America" he reflected.

"The problems that are tearing at the fabric of American society require all of us - government, business and civic society - to work together with a common purpose," he said.