Is Jamie Dimon, the CEO of JPMorgan, right?
In a sixty-six-page letter to shareholders, he predicts that the American economy will prosper through 2023. Dimon notes, “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 U.S. economy will likely boom. This boom could easily run into 2023 because all the spending could extend well into 2023.”
Actually, he may be understating matters. The truth is that the amount of money that President Joe Biden is pouring into the economy will probably trigger growth through 2024.
Biden has already signed into law the CARES Act, a $2.2 trillion economic pandemic rescue package. Unemployment, which reached 14.8 percent in April, has declined to 6.7 percent. The stimulus package was essential in paving the path to recovery.
Now Biden’s looking at duplicating that feat by passing an infrastructure bill that runs into the trillions. The Senate parliamentarian has already signed off on the legality of using the reconciliation process to pass an infrastructure bill that would allow Biden to avoid a GOP filibuster. This would further violate Biden’s pledge to push for bipartisanship during the 2020 campaign, but the political calculation of the Democrats is probably correct. Passing an infrastructure bill will have more of a beneficial impact on Democratic electoral fortunes than dispensing with a mythical bipartisanship.
The funny part of it is that President Donald Trump could have done what Biden is doing at the outset of his presidency in 2016. Trump had a golden opportunity to split the Democratic party by pushing for an infrastructure bill. He claimed he was going to pass an infrastructure bill and kept declaring infrastructure weeks. But it never happened. The builder president never built anything. Instead, he went for sweeping tax cuts, which Biden is largely aiming to repeal.
Whether Biden’s program will succeed is an open question. If Dimon is bullish about the economy over the next few years, he also cautions that America faces a new threat to its preeminence. Specifically, he singles out China. According to Dimon, “China’s leaders believe that America is in decline. They believe this not only because their country’s sheer size will make them the largest economy on the planet by 2030 but also because they believe their long-term thinking and competent, consistent leadership have outshone America’s in so many ways. The Chinese see an America that is losing ground in technology, infrastructure and education—a nation torn and crippled by politics, as well as racial and income inequality—and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals. Unfortunately, recently, there is a lot of truth to this.”
Still, China faces its own internal problems. America’s track record suggests that it can recover from its welter of problems, including a failing healthcare system, ineffective government bureaucracy, an overextended military and racial strife. Dimon points to income inequality as the most fundamental fault line in America. If a burgeoning economy can start to ease it, American will not simply recover but regain much of its lost global luster.
Jacob Heilbrunn is editor of The National Interest.