Jamie Dimon, CEO of JPMorgan Chase, stated on Tuesday that the U.S. economy is thriving and “incredible,” but he also issued a warning about the risks of stagflation.
Dimon expressed confidence in the growth of the U.S. economy, supported by strong employment and healthy consumer demand.
Previously, data from the U.S. Department of Labor showed that nonfarm payrolls in the U.S. surged by 303,000 in March, the largest increase since May last year. However, in March, the U.S. Consumer Price Index (CPI) rose by 3.5% year-on-year, with the core CPI increasing by 3.8%, exceeding expectations. The March Producer Price Index (PPI) also rose by 2.1% year-on-year, and the ISM Manufacturing Index for March surpassed expectations by crossing the 50 mark.
During an event at the Economic Club of New York on Tuesday, Dimon described the prosperity of the U.S. economy as “incredible.” He also said, “Even if we go into a recession, the condition of consumers remains strong.”
However, he also raised a warning, pointing out that factors such as rising U.S. national debt, currency inflation, and geopolitical conflicts could impact the economy. He specifically mentioned that inflation may persist longer than expected, leading to higher interest rates for an extended period.
Dimon also expressed concerns about the possibility of the U.S. economy repeating the stagflation of the 1970s. He stated during the event on Tuesday, “Yes, I think that is a possibility again.”
During that tumultuous decade, the U.S. economy faced stagflation, characterized by low growth and high inflation, and Dimon highlighted that this risk is present again. He remarked that in certain aspects, compared to the past twenty years, the current situation resembles the 1970s more.
Dimon had previously warned about a series of risks facing the U.S. economic recovery in a letter to shareholders on April 8, which could result in “more severe inflation and higher interest rates than anticipated by the market.”
Federal Reserve officials recently supported this view, with Fed Chair Jerome Powell and colleagues abandoning earlier guarantees of rate cuts, indicating that due to higher-than-expected inflation, interest rates may remain elevated for longer than anticipated.
In his April 8 letter, Dimon mentioned that JPMorgan Chase is prepared to switch rates between 2% and 8%. He reiterated this forecast on Tuesday and added, “We will also address stagflation.”
Moreover, the CEO of the largest bank in the U.S. also discussed policy issues such as U.S. military strength, political polarization, and the need for comprehensive economic development during the event on Tuesday. He compared the economic performance and policies of the U.S. with other countries.
“I want to help my country,” Dimon, one of the most prominent corporate executives in the U.S., said in an interview with Marie-Josee Kravis, Honorary Chair of the Economic Club of New York.
He expressed his hope that regardless of who becomes the next president, talents from other parties will be brought into their cabinet because he wishes to see pragmatic individuals serve the nation.
There have been speculations that Dimon may be nominated for a public office related to the economy. However, JPMorgan Chase has consistently declined to comment on the matter.
(Reference: Reuters)