The Clearing House Real-Time Payments Tracker October 2023

JPMorgan CEO: Inflation Battle Isn’t Over Yet

JPMorgan Chase

The head of America’s biggest bank says it’s too soon to declare victory against inflation.

“I’m afraid inflation might not go away that quickly,” JPMorgan Chase CEO Jamie Dimon told Bloomberg TV on Tuesday (Nov. 14). He said the Federal Reserve was correct in its temporary pause on interest rate increases but “they might have to do a little bit more.”

The report notes that Dimon has been arguing for months that while consumers and businesses may be in good shape now, they are facing significant headwinds, and said in September that his bank is warning clients of future rate hikes.

His comments came as the most recent reading of the Consumer Price Index showed the headline inflation rate unchanged in October, month over month, down from 0.4% in September. The year-on-year increase was at 3.2%, down sharply from the 9% rate seen in June of 2022.

As PYMNTS wrote, the individual categories detailed by the Labor Department “show some puts and takes,” with gas prices dropping 5% month on month, and 5.3% year on year.

However, the figures also showed consumers spending more across a host of other categories, including groceries, restaurant meals, clothing and housing, the last of which was up 6.7% since this time last year.

“Taken together, though the markets are cheering the headline numbers, and investors seem to be anticipating rate cuts from the Federal Reserve, the pressures of the paycheck-to-paycheck economy remain firmly in place,” PYMNTS wrote.

Recent PYMNTS Intelligence data has showcased the fact that inflation’s lingering impact has been substantial, with around 80% of consumers exhausting their savings to pay their bills, and 12% spending more than they’ve earned in the last six months.

Middle-income consumers – those who make $50,000 to $100,000 per year and account for more than half of the population — have seen their readily available savings in real terms drop by 18% in the last year, when factoring in inflation.

Meanwhile, separate PYMNTS Intelligence data shows that the average American consumer has at least one thing in common with JPMorgan’s billionaire chief executive: they both think inflation will stick around.

“And since a majority of consumers do not expect inflation to retreat to pre-pandemic levels until 2025 — prices have risen by more than 20% since 2019 — it make sense that the pressures and the less-than-sanguine outlook may lead to some additional belt-tightening in the months ahead,” PYMNTS wrote last week.