JPMorgan Chase Chief Executive Jamie Dimon has said he is not ruling out an outcome for the U.S. economy that is widely seen as worse than a recession.
The chief executive of America’s largest bank said this week that “the worst income is stagflation,” something he did not want to “take off the table.”
Economists consider stagflation, last seen in the United States in the 1970s, to be worse than a recession: It would send stocks tumbling and hurt 401(k) plans and other retirement savings funds.
Stagflation is the combination of economic factors deer-nation and en-inflation. Prices continue to rise as unemployment increases and economic growth slows – a triple whammy of trouble.
In a recession, unemployment rises and the economy contracts, but the silver lining is that there is little or no inflation.
Dimon made the comments at a time when economists are turning their attention to signs of a possible slowdown in growth.
While the annual inflation rate is inching closer to the Federal Reserve’s 2 percent target, reports on employment and manufacturing have revealed some signs of softening. CNBC reported.
JPMorgan Chase Chief Executive Jamie Dimon has said he would not rule out an outcome for the U.S. economy that is widely seen as worse than a recession.
Since taking over in 2006, Dimon, 68, has built JPMorgan Chase (which has retail and investment divisions) into the world’s largest and most powerful bank, with $4 trillion in assets.
Dimon said Tuesday at a Council of Institutional Investors fall conference in New York City: “I would say the worst outcome is stagflation — recession, higher inflation.”
“And by the way, I wouldn’t take it off the table.”
On Wednesday, the latest data from the Bureau of Labor Statistics revealed that consumer prices rose 2.5 percent from a year earlier in August.
This figure represents a decrease from the 2.9 percent annual rate recorded in July, and is the lowest rate of annual price growth since February 2021.
This downward trend toward the Fed’s 2 percent inflation target paves the way for the central bank to cut interest rates at its next meeting on Sept. 18.
This will bring down benchmark borrowing costs from their highest level in 23 years and provide some relief to households.
But Dimon is concerned that there are still a number of inflationary forces on the horizon, according to CNBC.
He said rising deficits and government spending would add pressure to an economy still reeling from the impact of persistently high interest rates.
“They’re all inflationary, basically in the short term, the next two years,” Dimon said.
“It’s hard to look at it and say, ‘Well, no, we’re out of the woods.’ I don’t think so.”
The Treasury Department announced Thursday that the U.S. government has spent more than $1 trillion this year on interest payments on the $35.3 trillion national debt.
This is the first time that interest payments have exceeded this benchmark figure.
Jamie Dimon said this week that “the worst crisis is stagflation,” something he would not “take off the table” for the US economy.
The downward trend toward the Federal Reserve’s 2 percent inflation target paves the way for the central bank to cut interest rates at its next meeting on Sept. 18 (pictured: Federal Reserve Chairman Jerome Powell)
Dimon had previously warned of an economic slowdown, saying he would not rule out a “hard landing” for the U.S. economy either.
A “hard landing” is when a marked economic slowdown occurs after a period of rapid growth.
Other economists have predicted that the United States is on track for a “soft landing,” something that has only happened once before.
This rare slowdown occurs when the inflation rate returns to the Fed’s 2 percent target without triggering a recession.
However, Dimon said in August that he thinks the odds of this happening are about 35 to 40 percent, CNBC reported, implying that a recession is the most likely outcome.