Jamie Dimon: The Consumer Balance Sheet Has Never Been In Better Shape

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Following is the unofficial transcript of a CNBC interview with JPMorgan Chase & Co. (NYSE:JPM) Chairman & CEO Jamie Dimon on CNBC’s “The Exchange” (M-F, 1PM-2PM ET) today, Monday, January 10th. Following are links to video on CNBC.com:

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The Consumer Balance Sheet Has Never Been In Better Shape, Says Jamie Dimon

JPMorgan’s Jamie Dimon Discusses The Impact Of Company's $250m Venture Fund On Health Care

KELLY EVANS: Welcome back, we've been talking to the big names at JP Morgan's virtual healthcare conference throughout the day today, and our next guest is one of the biggest. JPMorgan Chase Chairman and CEO Jamie Dimon joins us now along with CNBC’s Bertha Coombs. Bertha?

BERTHA COOMBS: Thanks very much, Kelly. And Jamie, thank you so much for joining us. Had really hoped that we'd be able to do this in person. I want to get to healthcare but given where the markets are today and some interesting comments you made during the keynote just now, I wanted to start off with the economy. Your sense says that the economy's in good shape, what's telling you that?

JAMIE DIMON: Bertha, I'm thrilled to be here. I think is our first interview together. So I look forward to it. And you know, when you look at the economy, the consumer, okay – now this is all respect to the fact that this is not true for all consumers and there's some still suffering and we're still kind of working through this. But the consumer balance sheet has never been in better shape. They're spending 25% more today than pre Covid. They've got $2 trillion in their checking accounts either have the wherewithal to spend more. They pay down a lot of debt. The debt service ratio has never been better since we've been keeping records for 50 years. Home prices are up, stock prices are up, jobs are plentiful and wages are going up. And that all tells you what's going to happen in the future. They're in pretty good shape. And businesses, confidence is high, they’ve got plenty of cash and capital. So underlying, we've had this strong economy. The numbers are herky jerky – inflation, growth, employment, unemployment, people going back to work, the great resignation – but that underlying stuff is paramount and is pushing you know – we're going to have, what, the best growth year we've ever had this year I think since you know, maybe sometime after – before the Great Depression. And so next year will be pretty good too. But obviously there's some negatives out there, but those things look pretty good. The market is different Bertha. And you know, the market can have its own fluctuations and unrelated to the economy. I think you need this kind of grown to justify the market. So we're kind of expecting that the market will have a lot of volatility this year as rates go up and people kind of redo projections and look at you know, the effect of interest rates and businesses differently than they did before.

COOMBS: One of the things that the market is focused on is the Fed. Goldman Sachs coming out this morning saying they now predict that the Fed may actually raise rates four times this year. You think the Fed may be able to engineer a soft landing though?

DIMON: I hope so. You know, listen, Bertha, no one knows the future. And again, I think we really should do is go back to March of 2020. We were on our way to 15% unemployment, a lot of people died from Covid and no known vaccine. Now we've got an unemployment of 4%, the consumer in good shape, business is in good shape. You know, and those things are really good. The Fed, you know, you can say that they should have started doing QE a little bit early and stuff like that. But you know, if we're lucky, they can engineer a slowdown and you'll see inflation coming down. You know, a lot of people project inflation be 2.3% at the end of this year, I don't. I think it's going to be higher. But you know, if we're lucky, the Fed will slow things down, we'll have what they call a soft landing. You know, and it's going to be a little bit like threading the needle. So you can't look at anything and say, “That's my projection,” because you really don’t know. It is possible inflation is worse than they think and they raise rates more than people think. I’d personally be surprised if it is just four increases next year. You know, I think that four increases of 25 basis points is a very, very little amount, and very easy for the economy to absorb.

COOMBS: It's interesting, I thought one of the things that you said was that if we do get a Fed induced recession, that doesn't have to be painful or long.

DIMON: Yeah, if you look at history, okay, and, you know, there's no common, you know, one type of recession. But a fairly common one is Fed raising rates to slow down the economy, overheated economy to kind of keep inflation in check. And if I remember correctly, if you look at the six of them, some of them are just short. They were, you know, six months, nine months long. You didn't even go into negative growth really for much more than a quarter or so. And so, you know, and unemployment goes up and not a lot. So, hopefully, that's the case. I do think you have underlying all of that a very strong consumer, very strong businesses. And, you know, hopefully, maybe Omicron – we don't know what the future variance will be, but hopefully Omicron may be putting this COVID-19 in rearview mirror. And if that's true, we may have a very, very good Spring.

COOMBS: You know, obviously, healthcare has been one of the areas that's been causing inflation for a long time but given that inflation is so hot, it seems relative now. Switching to healthcare, I want to talk about your new venture. You launched Morgan Health last year, you tapped Dan Levinson, the founder and CEO of Avalere Health, to lead it and one of the big parts of that is that you've got $250 million you're going to put to work in venture investments. Why is that so important?

DIMON: So, look at the big picture here. So, America’s got some of the best healthcare in the world, pharma, doctors, medicine, hospitals, I'm a beneficiary of that, but it's 18% of GDP. The rest of the world, the developing world is at 9% and we don't have the best outcomes, returnee care or obesity or cancer care, blood pressure is worse than a lot of folks so that we can acknowledge those problems and attack them. So, we're attacking from the employer standpoint, we've got fabulous people who manage our healthcare, but, but, but Dan Mendelson hired a great group of people and who can be using things like AI and cloud accountable care so we’re trying this thing in Columbus through Vera, where we're gonna try to get people more primary care physicians to help them navigate, you know, through the healthcare system. If you just do a better job managing people’s blood pressure or managing musculoskeletal diseases, you can have better outcomes at a lower cost if you can intervene properly, if you get more people do wellness programs. So and I think AI and cloud will do a lot here so, you know, we hope for better outcomes for our folks through better healthcare and more affordability and as part of that effort, the team is also looking at the racial healthcare like, you know, it is true that people who are lower income have worse healthcare than people with higher income and we should do something about that. I should point out to the people on CNBC, JPMorgan for years has subsidized healthcare much more for lower paid individuals than for higher paid, part of it in recognition of that.

COOMBS: I have talked to Dan about some of the efforts that they're doing and they've gotten, going very quickly. You've got one contract in Columbus, Ohio. You have 38,000 employees that is going to be based on trying to manage chronic conditions and then you're working on a deal with Kaiser Permanente out in California to deal with these health equity issues and try to bring down those health disparities. But you're also spending $1.8 billion a year on healthcare. Certainly, you are intent on bringing those costs down. How do you measure success here? Is it about outcomes, or is it about bringing costs down?

DIMON: It's really about outcomes, you know, outcome. And you make a very important point we spend like $35 billion a year in salaries, $2 billion a year in healthcare, that 2 billion maybe most important that's 250 million people, they take care of themselves, they have better lives, they're more productive, they're happier, they're taking care of their kids so that is so important. We get that right and it's all about better outcomes. Better outcomes is that we know you that we find out that you hide your diabetes, we do something about it. We find out you have blood pressure, we do something about it. If you want to get you to navigate through the healthcare system and more and more transparency and more affordability, but part of it will be affordability, both for the economy, the companies and the individuals because the thing they complain a lot about is the cost of healthcare, like this whole thing about surprise billing. You know, hospitals should stop surprise billing. The reason why I know about it who said we will not allow physician cracks in here that are out of network. And so, there are million things we can do for transparency and getting consumers healthier, happier, and probably even at a lower cost.

COOMBS: You know, a lot of what you've already started to do with Morgan healthcare is what was the intent and the aim of your venture with Amazon and Berkshire Hathaway if Haven never got off the ground? What went wrong there?

DIMON: Yeah, look, we learned a lot from our prior ventures but we're on the same course. We started with, the parties went different ways. We've learned a lot and we're continuing on. So, you know, and we've learned a lot part is important. Jeff Bezos always talks about, you know, failures you learn from something so I don't worry that much about what went wrong. What I'm worried about what we learned, how we go forward. We're lucky to get Dan Mendelsohn and his team involved. These folks are experts in, in healthcare and doctors and science and AI and working very closely with Bernadette and her team at JPMorgan doing these complex healthcare things. So, I am convinced that this thing will have better outcomes for our employees. And then if we've learned things, we're going to share with the world too. And there will be in my view and you've seen it already, a lot of policy things that people can do around hospital publishing prices, you know, surprise billings, I think telemedicine digital site and that digital medicine and, you know, AI will really help you over time too.

COOMBS: One of the most important healthcare issues that you're dealing with right now, of course is COVID and the new Omicron surge. At Citi, they have said that employees who are not vaccinated by the end of this week will lose their jobs. Where do you stand right now on mandates if they are upheld by the courts which it appears for now at least they are, and what does that mean for back to work?

DIMON: Yeah, so you know, we, we believe that going to work is a good thing that people deal with each other for innovation and creativity and just just humanity is a good thing. And obviously, we're not we're here unlike any of the policies we ever had. We're not trying to be consistent because as you pointed out, there are different laws and different requirements and cities and states and schools and so here we're adjusting locally. So in our main headquarters building, we have a vax mandate but remember, 97% of the people are vaxxed so to go to the office, you have to be vaxxed and, you know, if you aren't going to get vaxxed, you won’t be able to work in that office. We're not going to pay you to not work in the office. So in other parts of the world where it would be quite different than that but we want people to get vaxxed. But going back to work where, again, we have the same strategy, where to go back to work, of course, you have more hybrid and more flexibility as long as it works for the clients. This notion that it can only work for employees isn't a fair notion. So and we're the other question is I think people spend too much, we don’t have to answer this right away. Let's get back and we'll find ways to get to flexibility that makes sense and the tools that do that and so, I'm quite comfortable life, airflows look a lot like life did before. I also want to point out the American people if I remember correctly, 100 million people go to work every single day. So all the time that everyone's sitting at home talking about this, that was 40, 50 million people. Military goes to work, police goes to work, firemen go to work, sanitation, agricultural workers, bank branches, manufacturing, Amazon, UPS, FedEx, supply, logistics, meatpacking, you're talking about 40 or 50 million who, it’s great there’s flexibility and overtime, you know, if you can accommodate that, that's a great thing, but it's also got to work for the company. And so we'll find out ways to, you know, have the best of both worlds here. Like I said, it doesn't be the same everywhere. So as buildings get to 95% and 97% vaxxed in certain states, that may end up with a different policy than a different state. And that's fine, too. We're not looking for nirvana here. You're not going to find it.

COOMBS: Jamie, thank you so much for joining us, and I'm hopeful that maybe we can follow up on some of the progress that you make with Morgan Health in person one of these days.

DIMON: So Bertha, thank you very much for having me. I just want to point out, I like the fact that a bipartisan infrastructure bill, please, please, please, let's all work together and collaborate. All of our problems are fixable. All of them and American leadership is really needed desperately.

COOMBS: Alright, thanks again. Jamie. Jamie Dimon, Chairman & CEO of JPMorgan from the JPMorgan Healthcare Conference.