Economists echo Dimon’s concerns as US credit downgrade and tariff-driven uncertainty continue.
JPMorgan Chase CEO Jamie Dimon has warned that he can’t rule out the possibility that the United States will fall into what is called stagflation— an economic term that refers to a period when inflation and unemployment are high as economic growth is slow.
In an interview with Bloomberg Television on Thursday, Dimon said, “I don’t agree that we’re in a sweet spot” in response to a question about some US Federal Reserve officials saying that the US economy was in a sweet spot.
Dimon made his comments while at JPMorgan’s Global China Summit in Shanghai. His comments come against the backdrop of the US facing increasing geopolitical tensions, rising deficits and pressure on consumer prices from changing government policies on tariffs that have led retailers to announce a need to raise prices and left businesses in a wait-and-watch mode over all the economic uncertainties.
Economists like Stuart Mackintosh, executive director of the financial think tank Group of Thirty, echoed Dimon’s concerns to Al Jazeera.
“Stagflation is a real risk we cannot rule out. We’re in a circumstance where we have uncertainty on tariffs, uncertainty on many policies that increase the downward pressure on growth in America.”
Last week Moody’s Ratings downgraded the US economy’s credit rating. The firm lowered its gold-standard Aaa to an Aa1 credit rating for the US, citing its growing national debt.
Dimon’s Thursday comments were underscored by his remarks at the company’s investor day on Monday.
“Credit today is a bad risk,” Dimon said.
While at the summit, Dimon also offered comments on US President Donald Trump’s “big beautiful bill”, the tax and spending bill passed by the US House of Representatives that includes key parts of the Trump administration agenda including tax cuts, slashes to Medicaid and the Supplemental Nutrition Assistance Program (SNAP), increased funding for immigration enforcement, and new taxes on colleges and universities.
“I think they should do the tax bill. I do think it’ll stabilise things a little bit, but it’ll probably add to the deficit,” Dimon said in a record first obtained by the Reuters news agency.
The nonpartisan Congressional Budget Office has said that the tax bill would add $3.8 trillion to the national debt.
‘Inflation going up’
In the Bloomberg interview, Dimon added that the US Federal Reserve is doing the right thing to wait and see before it decides on monetary policy. The central bank opted to hold rates steady at its last policy meeting, which was largely in line with economists’ expectations.
Policymakers weighed a stable labour market at the time, even as they acknowledged that could be short-lived.
“This is unsustainable. We might get into a much worse economic picture almost immediately,” Mackintosh said.
More information on the state of the US labour market is expected in the next couple of weeks as both the US Department of Labor and the payroll and human resources firm ADP are slated to release their monthly report on the rate of job growth.
Dimon has also long warned that inflation and stagflation will continue to increase.
“I think the chance of inflation going up and stagflation is a little bit higher than other people think,” he noted.
On Wall Street, JPMorgan Chase’s stock has trended up following Dimon’s remarks. As of noon in New York (16:00 GMT), it was 0.2 percent higher than yesterday’s market close after opening lower this morning.