(The Epoch Times)—JPMorgan Chase CEO Jamie Dimon has sounded the alarm that U.S. consumers are running down their excess cash buffers and that inflation could stay stuck in high gear due in part to high government spending, while issuing an ominous warning that the “most dangerous time” that the world has seen in decades has arrived.
Mr. Dimon made the remarks while reporting JPMorgan’s third-quarter results, which showed America’s biggest bank by assets generating net income of $13.2 billion.
After boasting that his bank had $3.2 trillion in assets and a return on average tangible common shareholders’ equity (ROTCE) of 22 percent in the third quarter, Mr. Dimon turned his attention to the broader economy—and the headwinds it faces.
While warning of clouds on the horizon of consumer spending, “extremely” high government debt levels, and the largest peacetime fiscal deficits in U.S. history, Mr. Dimon said he sees a growing risk that inflation stays high and that the Fed will raise interest rates even higher.
He then mentioned the disruptive impact of the war in Ukraine and the recent terror attacks in Israel, warning of “far-reaching impacts on energy and food markets, global trade, and geopolitical relationships.”
“This may be the most dangerous time the world has seen in decades,” he cautioned.
Economic Headwinds
One area Mr. Dimon focused on was the waning strength of American consumers and their key contribution their spending makes to the U.S. economy.
“Currently, U.S. consumers and businesses generally remain healthy, although, consumers are spending down their excess cash buffers,” he said.
Consumer spending is a key barometer of economic health in the United States as it accounts for roughly two-thirds of gross domestic product (GDP). This means that if the all-mighty U.S. consumer taps out, the economy is likely not far behind.
His warning about excess savings being depleted comes as the Federal Reserve Bank of New York revealed on Oct. 11 that Americans’ disposable income has fallen and consumers are increasingly dipping into the savings to prop up consumption.
From the beginning of the pandemic in 2020 through the end of 2021, Americans’ excess savings grew to roughly $2.6 trillion, or 14 percent of annual disposable income, according to the New York Fed.
Since then, U.S. excess savings has steadily fallen, dropping to 10 percent of disposable income—or $1.9 trillion—by the second quarter of 2023.
Data for the first two months of the third quarter cited by the New York Fed show that consumers have generally maintained their propensity to spend but, as real disposable income has fallen, they’ve increasingly been drawing on their savings to continue shopping.
The latest government data on consumer spending is for August, and it shows personal consumption expenditures (PCE) slowing down in recent months. Spending grew 0.4 percent in August, less than half of July’s pace of 0.9 percent.
But clouds seem to building on the horizon. A recent survey carried out in September by CNBC-Morning Consult found that 92 percent of U.S. adults have cut back on spending over the past six months. What’s more, over three-quarters of those polled said they plan to cut back on spending for nonessential items in the future.
All this has a growing number of economists and business leaders worried that the U.S. consumer may be reaching a breaking point.
For example, former Walmart CEO Bill Simon told CNBC in a recent interview that a series of factors—political polarization, inflation, and high interest rates—were all working together to undermine consumers and their propensity to spend.
“That sort of pileup wears on the consumer and makes them wary,” Mr. Simon told the outlet. “For the first time in a long time, there’s a reason for the consumer to pause.”
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Concerns about inflation rearing its ugly head are on the rise, as well.
Inflation Eroding Living Standards
Nearly 50 percent of Americans say high prices are eroding their living standards—a record number that matched the all-time high set in July 2022, when the pace of inflation was a whisker away from breaking into the double digits.
“After stabilizing earlier this year, concerns about inflation have grown again,” reads the latest University of Michigan Surveys of Consumers report, released on Oct. 13.
The survey shows that 49 percent of consumers polled in early October said high prices were eroding their living standards. That’s up substantially from last month’s 39 percent and matches the all-time high notched in July 2022.
Inflation, as measured by the Consumer Price Index (CPI), shot up at a furious pace through 2021 and narrowly missed breaking the 10 percent psychological barrier by mid-2022.
The pace of rising prices hit a recent peak of 9 percent in June 2022, a multi-decade high that later fell to 3.1 percent by June 2023. However, inflation in August and September jumped back up to 3.7 percent—bringing with it renewed concerns about inflation.
What’s more, year-ahead inflation expectations have jumped, rising from 3.2 percent in September to 3.8 percent in early October, per the University of Michigan survey.
This, in turn, has led to a sharp drop in consumer confidence.
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The University of Michigan survey showed that overall consumer sentiment plunged 7 percent in October, after two months of relatively little change.
“Assessments of personal finances declined about 15 percent, primarily on a substantial increase in concerns over inflation, and one-year expected business conditions plunged about 19 percent,” said University of Michigan Surveys of Consumers Director Joanne Hsu, in a statement.
Other reports, including from The Conference Board and the New York Fed, show consumer strength and optimism waning, threatening to put a damper on the economy.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
