JPMorgan Chase stashed away hundreds of millions of dollars in cash amid growing fears that the U.S. economy will enter a recession, The Wall Street Journal reported.
JPMorgan Chase put aside $900 million in cash in preparation for an economic downturn, The Wall Street Journal reported. JPMorgan chief executive officer Jamie Dimon has increasingly warned that the Federal Reserve has been behind the curve fighting inflation and their efforts will bring the U.S. economy into a recession around the fourth quarter of 2022.
The stashed funds will now act as a safety net for the bank when the economy enters a correction or recession, the WSJ reported. Dimon sees rampant inflation and the invasion of Ukraine posing as the greatest risk to the U.S. economy.
“Those are very powerful forces, and those things are going to collide at one point,” Dimon said during a media conference call, according to CNBC, adding that a recession is “absolutely” a possibility.
The last thing businesses want when inflation is so high is cash on hand because that represents an asset that is losing value, E.J Antoni, a research fellow at the Heritage Foundation, told the Daily Caller News Foundation.
“The only reason a company would do this would be out of tremendous fear that real assets are going down in value,” Antoni told the DCNF. “The extra cash on hand is going to give them a big cushion if the economy enters a downturn and assets start losing their value.”
“JPMorgan is really justified in their fears of needing that extra cash because if you look at real growth in many areas of the economy, it is turning negative.”
The bank announced Wednesday it recorded $8.28 billion in profits during the first quarter of 2022, a substantial decrease from 2021’s figure of $14.3 billion. The stock price for JPMorgan decreased 3.2% to $127.30 Wednesday after it released its earnings report, according to CNBC.
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